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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 1-12074
 STONE ENERGY CORPORATION
  State or other jurisdiction of incorporation or organization: Delaware
    
    I.R.S. Employer Identification No. 72-1235413
 625 E. Kaliste Saloom RoadLafayette, Louisiana
    
    70508(Address of principal executive offices)
    
    (Zip Code)
   Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, Par Value $.01 Per Share
    
    New York Stock Exchange
  þ o
  o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 Page No.PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    8Item 1B. Unresolved Staff Comments
    
    
    15Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    20Item 4. Submission of Matters To a Vote of Security Holders
    
    
    22Item 4A. Executive Officers of the Registrant
    
    
    22PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    23Item 6. Selected Financial Data
    
    
    25Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8. Financial Statements and Supplementary Data
    
    
    37Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    38Item 9A. Controls and Procedures
    
    
    38Item 9B. Other Information
    
    
    40PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    40Item 11. Executive Compensation
    
    
    40Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    40Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    40Item 14. Principal Accounting Fees and Services
    
    
    40PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    41Index to Financial Statements
    
    
    F-1Glossary of Certain Industry Terms
    
    
    G-1EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-99.1
  2




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PART I
 This section highlights information that is discussed in more detail in the remainder of the
document. Throughout this document we make statements that are classified as forward-looking.
Please refer to the Forward-Looking Statements section beginning on page 7 of this document for
an explanation of these types of statements. We use the terms Stone, Stone Energy, company,
we, us and our to refer to Stone Energy Corporation and its consolidated subsidiaries.
Certain terms relating to the oil and gas industry are defined in Glossary of Certain Industry
Terms, which begins on page G-1 of this Form 10-K .
 
 ITEM 1.
    
    BUSINESS
 The Company
  Strategy and Operational Overview
  Gulf of Mexico  Conventional Shelf (Including Onshore Louisiana)
  Gulf of Mexico  Deep Water/ Deep Shelf
   Appalachia
  Rocky Mountain Region
  3




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Oil and Gas Marketing
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk  Commodity
Price Risk.
 Competition and Markets
 Item 1A. Risk Factors  Competition within our industry may adversely
affect our operations.
  Regulation
    4




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Environmental Regulation
  5




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6




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Employees
  Available Information
  Forward-Looking Statements
   
    
    any expected results or benefits associated with our acquisitions;
 
    
    estimates of our future oil and natural gas production, including estimates of any
increases in oil and gas production;
 
    
    planned capital expenditures and the availability of capital resources to fund capital
expenditures;
 
    
    our outlook on oil and gas prices;
 
    
    estimates of our oil and gas reserves;
 
    
    any estimates of future earnings growth;
 
    
    the impact of political and regulatory developments;
 
    
    our outlook on the resolution of pending litigation and government inquiry;
 
    
    estimates of the impact of new accounting pronouncements on earnings in future
periods;
 
    
    our future financial condition or results of operations and our future revenues and
expenses;
 
    
    estimates of future income taxes; and
 
    
    our business strategy and other plans and objectives for future operations.
  
    
    commodity price volatility;
 
    
    domestic and worldwide economic conditions;
 
    
    the availability of capital on economic terms to fund our capital expenditures and
acquisitions;
 
    
    our level of indebtedness;
 7




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
    
    declines in the value of our oil and gas properties resulting in a decrease in our
borrowing base under our credit facility and ceiling test write-downs and impairments;
 
    
    our ability to replace and sustain production;
 
    
    the impact of a financial crisis on our business operations, financial condition and
ability to raise capital;
 
    
    the ability of financial counterparties to perform or fulfill their obligations under
existing agreements;
 
    
    third party interruption of sales to market;
 
    
    inflation;
 
    
    lack of availability of goods and services;
 
    
    regulatory and environmental risks associated with drilling and production activities;
 
    
    drilling and other operating risks;
 
    
    unsuccessful exploration and development drilling activities;
 
    
    hurricanes and other weather conditions;
 
    
    the adverse effects of changes in applicable tax, environmental and other regulatory
legislation;
 
    
    the uncertainty inherent in estimating proved oil and natural gas reserves and in
projecting future rates of production and timing of development expenditures; and
 
    
    the other risks described in this Form 10-K.
   
 ITEM 1A.
    
    RISK FACTORS
  Oil and natural gas prices are volatile. Declines in commodity prices have adversely affected, and
in the future may adversely affect, our financial condition and results of operations, cash flows,
access to the capital markets, and ability to grow.
   
    
    changes in the supply of and demand for oil and natural gas;
 
    
    market uncertainty;
 
    
    the level of consumer product demands;
 
    
    hurricanes and other weather conditions;
 
    
    domestic governmental regulations and taxes;
 
    
    the price and availability of alternative fuels;
 
    
    political and economic conditions in oil producing countries, particularly those in
the Middle East, Russia, South America and Africa;
 
    
    actions by the Organization of Petroleum Exporting Countries (OPEC);
 
    
    the foreign supply of oil and natural gas;
 
    
    the price of oil and gas imports; and
 
    
    overall domestic and foreign economic conditions.
  8




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We may not be able to replace production with new reserves.
   Our actual recovery of reserves may substantially differ from our proved reserve estimates.
    We require substantial capital expenditures to conduct our operations and replace our
production, and we may be unable to obtain needed financing on satisfactory terms necessary
to fund our planned capital expenditures.
  9




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A financial crisis may impact our business and financial condition. A financial crisis may
adversely impact our ability to obtain funding under our current bank credit facility or in the
capital markets.
  Our debt level and the covenants in the current and any future agreements governing our debt could
negatively impact our financial condition, results of operations and business prospects.
  
    
    incurring additional debt;
 
    
    paying dividends on stock, redeeming stock or redeeming subordinated debt;
 
    
    making investments;
 
    
    creating liens on our assets;
 
    
    selling assets;
 
    
    guaranteeing other indebtedness;
 
    
    entering into agreements that restrict dividends from our subsidiary to us;
 
    
    merging, consolidating or transferring all or substantially all of our assets; and
 
    
    entering into transactions with affiliates.
  
    
    making it more difficult for us to satisfy our obligations under the indentures or
other debt and increasing the risk that we may default on our debt obligations;
 
    
    requiring us to dedicate a substantial portion of our cash flow from operating
activities to required payments on debt, thereby reducing the availability of cash flow
for working capital, capital expenditures and other general business activities;
 
    
    limiting our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions and other general business activities;
 
    
    limiting our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate;
 
    
    detracting from our ability to successfully withstand a downturn in our business or
the economy generally;
 
    
    placing us at a competitive disadvantage against other less leveraged competitors; and
 
    
    making us vulnerable to increases in interest rates, because debt under our credit
facility is at variable rates.
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We have experienced significant shut-ins and losses of production due to the effects of hurricanes
in the Gulf of Mexico
  The marketability of our production depends mostly upon the availability, proximity and capacity of
oil and natural gas gathering systems, pipelines and processing facilities.
  We may not receive payment for a portion of our future production.
  Lower oil and gas prices and other factors have resulted, and in the future may result,
in ceiling test write-downs and other impairments of our asset carrying values.
  There are uncertainties in successfully integrating our acquisitions.
  11




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Part of our strategy includes drilling in new or emerging plays. As a result, our drilling
in these areas is subject to greater risk and uncertainty.
  Our operations are subject to numerous risks of oil and gas drilling and production activities.
  
    
    unexpected drilling conditions;
 
    
    pressure or irregularities in formations;
 
    
    equipment failures or accidents;
 
    
    hurricanes and other weather conditions;
 
    
    shortages in experienced labor; and
 
    
    shortages or delays in the delivery of equipment.
  Our industry experiences numerous operating risks.
    We may not be insured against all of the operating risks to which our business in exposed.
 .
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Terrorist attacks aimed at our facilities could adversely affect our business.
  Competition within our industry may adversely affect our operations.
  Our oil and gas operations are subject to various U.S. federal, state and local governmental
regulations that materially affect our operations.
  The loss of key personnel could adversely affect our ability to operate.
  Hedging transactions may limit our potential gains or become ineffective.
  
    
    our production is less than expected or is shut-in for extended periods due to
hurricanes or other factors;
 
    
    there is a widening of price differentials between delivery points for our production
and the delivery point assumed in the hedge arrangement;
 
    
    the counterparties to our futures contracts fail to perform the contracts;
 
    
    a sudden, unexpected event materially impacts oil or natural gas prices; or
 
    
    we are unable to market our production in a manner contemplated when entering into the
hedge contract.
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Our Certificate of Incorporation and Bylaws have provisions that discourage corporate takeovers and
could prevent stockholders from realizing a premium on their investment.
  Resolution of litigation could materially affect our financial position and results of operations.
 ( Item 3. Legal Proceedings)
 Certain U.S. federal income tax deductions currently available with respect to oil and gas
exploration and development may be eliminated as a result of future legislation.
   The adoption of climate change legislation by Congress could result in increased operating costs
and reduced demand for the oil and natural gas we produce.
  14




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The adoption of derivatives legislation by Congress could have an adverse impact on our ability to
hedge risks associated with our business.
 bona fide
 Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could
result in increased costs and additional operating restrictions or delays.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  15




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ITEM 2.
    
    PROPERTIES
  Oil and Natural Gas Reserves
    Summary of Oil and Gas Reserves as of December 31, 2009Based on Average Fiscal-Year PricesOil andOil
    
    Natural Gas
    
    Natural Gas(MBbls)
    
    (MMcf)
    
    (MMcfe)Reserves Category:PROVEDDeveloped
    
    
    24,379
    
    
    
    172,452
    
    
    
    318,729Undeveloped
    
    
    7,957
    
    
    
    44,242
    
    
    
    91,982TOTAL PROVED
    
    
    32,336
    
    
    
    216,694
    
    
    
    410,711
  16




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December 31, 20092009
    
    Estimated ProvedProduction
    
    Reserves
    
    Nature ofField Name
    
    Location
    
    (MMcfe)
    
    (MMcfe)
    
    InterestMississippi Canyon Block 109
    
    GOM Shelf
    
    
    6,256
    
    
    
    77,345
    
    
    WorkingShip Shoal Block 113
    
    GOM Shelf
    
    
    3,894
    
    
    
    56,750
    
    
    WorkingEwing Bank Block 305
    
    GOM Shelf
    
    
    11,050
    
    
    
    33,921
    
    
    WorkingMain Pass Block 288
    
    GOM Shelf
    
    
    5,102
    
    
    
    23,406
    
    
    WorkingSouth Pelto Block 22
    
    GOM Shelf
    
    
    6,958
    
    
    
    21,009
    
    
    Working
  Sensitivity of Reserves to PricesDecember 31, 2009 Estimated Proved ReservesStandardizedOil
    
    Natural Gas
    
    Oil and Natural
    
    MeasurePrice Case
    
    (MBbls)
    
    (MMcf)
    
    Gas (MMcfe)
    
    ($ in thousands)SEC pricing (a)
    
    
    32,336
    
    
    
    216,694
    
    
    
    410,711
    
    
    $
    614,987Scenario 1 (b)
    
    
    29,039
    
    
    
    173,545
    
    
    
    347,777
    
    
    
    282,182Scenario 2 (c)
    
    
    33,345
    
    
    
    233,614
    
    
    
    433,686
    
    
    
    883,114
 
 (a)
    
    This case represents pricing under SEC rules. The 2009 average 12-month oil and gas
prices net of differentials were $58.95 per barrel of oil and $3.49 per Mcf of gas.(b)
    
    Scenario 1 estimates total proved reserves assuming an average oil price $10.00 lower and
an average gas price $1.00 lower than prices required to be used under the SECs rules.(c)
    
    Scenario 2 estimates total proved reserves assuming an average oil price $10.00 higher
and an average gas price $1.00 higher than prices required to be used under the SECs rules.  i.e.
 17




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Acquisition, Production and Drilling Activity
 Acquisition and Development Costs.
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Acquisition costs, net of sales of unevaluated properties
    
    $
    9,072
    
    
    $
    1,830,468
    
    
    $
    18,730Development costs (1)
    
    
    199,375
    
    
    
    59,586
    
    
    
    154,507Exploratory costs
    
    
    78,582
    
    
    
    146,529
    
    
    
    10,966Sale of Rocky Mountain Region properties
    
    
    
    
    
    
    
    
    
    
    (1,363,939
    )Subtotal
    
    
    287,029
    
    
    
    2,036,583
    
    
    
    (1,179,736
    )Capitalized salaries, general and administrative costs and
interest, net of fees and reimbursements
    
    
    44,282
    
    
    
    45,757
    
    
    
    36,178Total additions (reductions) to oil and gas properties, net
    
    $
    331,311
    
    
    $
    2,082,340
    
    
    
    ($1,143,558
    )
 
 (1)
    
    Includes asset retirement costs of $11,607, ($96,346) and $20,171 for the years
ended December 31, 2009, 2008
and 2007, respectively. Production Volumes, Sales Price and Cost Data.
 Year Ended December 31,2009
    
    2008
    
    2007Production:Oil (MBbls)
    
    
    6,207
    
    
    
    4,916
    
    
    
    6,088Natural gas (MMcf)
    
    
    41,335
    
    
    
    34,409
    
    
    
    45,088Oil and natural gas (MMcfe)
    
    
    78,577
    
    
    
    63,903
    
    
    
    81,617Average sales prices:(1)Oil (per Bbl)
    
    $
    70.72
    
    
    $
    93.79
    
    
    $
    69.68Natural gas (per Mcf)
    
    
    6.59
    
    
    
    9.78
    
    
    
    7.30Oil and natural gas (per Mcfe)
    
    
    9.05
    
    
    
    12.48
    
    
    
    9.23Expenses (per Mcfe):Lease operating expenses (2)
    
    $
    2.00
    
    
    $
    2.68
    
    
    $
    1.83
 
 (1)
    
    Includes the settlement of effective hedging contracts.(2)
    
    Includes oil and gas operating costs and major maintenance
expense and excludes production and ad valorem taxes. Production Volumes, Sales Price and Cost Data for Individually Significant Fields.
 Year Ended December 31,Mississippi Canyon Block 109
    
    2009
    
    2008
    
    2007Production:Oil (MBbls)
    
    
    861
    
    
    
    1,035
    
    
    
    1,756Natural gas (MMcf)
    
    
    1,092
    
    
    
    1,700
    
    
    
    2,234Oil and natural gas (MMcfe)
    
    
    6,256
    
    
    
    7,913
    
    
    
    12,767Average sales prices:(1)Oil (per Bbl)
    
    $
    66.68
    
    
    $
    107.96
    
    
    $
    70.32Natural gas (per Mcf)
    
    
    3.81
    
    
    
    9.55
    
    
    
    6.71Oil and natural gas (per Mcfe)
    
    
    9.86
    
    
    
    16.18
    
    
    
    10.84Expenses (per Mcfe):Lease operating expenses (2)
    
    $
    2.19
    
    
    $
    0.86
    
    
    $
    0.63
 
 (1)
    
    Exclusive of the settlement of effective hedging contracts.(2)
    
    Includes oil and gas operating costs and major maintenance
expense and excludes production and ad valorem taxes. 18




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Drilling Activity.
 Year Ended December 31,2009
    
    2008
    
    2007Gross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetExploratory Wells:Productive
    
    
    12.00
    
    
    
    6.75
    
    
    
    6.00
    
    
    
    3.50
    
    
    
    1.00
    
    
    
    1.00Dry
    
    
    
    
    
    
    
    
    
    
    6.00
    
    
    
    3.98
    
    
    
    1.00
    
    
    
    1.00Development Wells:Productive
    
    
    5.00
    
    
    
    4.00
    
    
    
    9.00
    
    
    
    7.18
    
    
    
    19.00
    
    
    
    12.71Dry
    
    
    4.00
    
    
    
    4.00
    
    
    
    1.00
    
    
    
    0.25
    
    
    
    1.00
    
    
    
    0.33
  Productive Well and Acreage Data.
 Gross
    
    
    NetProductive Wells:Oil (1):Gulf Coast Basin
    
    
    153
    
    
    
    118Rocky Mountain Region
    
    
    
    
    
    
    Appalachia
    
    
    
    
    
    
    153
    
    
    
    118Gas (2):Gulf Coast Basin
    
    
    93
    
    
    
    73Rocky Mountain Region
    
    
    
    
    
    
    Appalachia
    
    
    6
    
    
    
    399
    
    
    
    76Total
    
    
    252
    
    
    
    194Developed Acres:Gulf Coast Basin
    
    
    94,824
    
    
    
    73,140Rocky Mountain Region
    
    
    40
    
    
    
    14Appalachia
    
    
    525
    
    
    
    26395,389
    
    
    
    73,417Undeveloped Acres (3):Gulf Coast Basin
    
    
    512,019
    
    
    
    364,314Rocky Mountain Region
    
    
    249,128
    
    
    
    80,516Appalachia
    
    
    43,980
    
    
    
    41,887805,127
    
    
    
    486,717Total
    
    
    900,516
    
    
    
    560,134
 
 (1)
    
    25 gross wells each have dual completions.(2)
    
    6 gross wells each have dual completions.(3)
    
    Leases covering approximately 17.2% of our undeveloped gross acreage will expire in
2010, 10.6% in 2011, 8.4% in 2012, 31.2% in 2013, 4.7% in 2014, 7.0% in 2015, 6.0% in 2016,
1.7% in 2017, 9.3% in 2018 and 3.9% in 2019. Title to Properties
  19




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ITEM 3.
    
    LEGAL PROCEEDINGS
 Franchise Tax Action. th
 Federal Securities Action.
     20




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Derivative Actions. th
   Ad Valorem Tax Suit.
   21




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ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 4A.
    
    EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionDavid H. Welch
    
    
    61
    
    
    President, Chief Executive Officer and DirectorKenneth H. Beer
    
    
    52
    
    
    Senior Vice President and Chief Financial OfficerAndrew L. Gates, III
    
    
    62
    
    
    Senior Vice President, General Counsel and SecretaryE. J. Louviere
    
    
    61
    
    
    Senior Vice President  LandJ. Kent Pierret
    
    
    54
    
    
    Senior Vice President, Chief Accounting Officer and TreasurerRichard L. Smith
    
    
    51
    
    
    Senior Vice President  Exploration and Business DevelopmentJerome F. Wenzel, Jr.
    
    
    57
    
    
    Senior Vice President  Operations/ExploitationFlorence M. Ziegler
    
    
    49
    
    
    Vice President  Human Resources and Administration
 David H. Welch
 Kenneth H. Beer
 Andrew L. Gates, III
 E. J. Louviere
 J. Kent Pierret
 Richard L. Smith
 Jerome F. Wenzel, Jr.
 Florence M. Ziegler
 22




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  High
    
    
    Low2008First Quarter
    
    $
    55.89
    
    
    $
    39.14Second Quarter
    
    
    73.96
    
    
    
    52.20Third Quarter
    
    
    68.14
    
    
    
    37.86Fourth Quarter
    
    
    41.61
    
    
    
    8.472009First Quarter
    
    $
    13.73
    
    
    $
    1.55Second Quarter
    
    
    9.85
    
    
    
    3.09Third Quarter
    
    
    18.43
    
    
    
    5.83Fourth Quarter
    
    
    20.51
    
    
    
    13.752010First Quarter (through February 22, 2010)
    
    $
    19.76
    
    
    $
    14.12
  Dividend Restrictions
  Issuer Purchases of Equity Securities
  Total Number of
    
    
    Maximum Number (orShares (or Units)
    
    
    Approximate Dollar Value)Total Number
    
    
    Average
    
    
    Purchased as Part
    
    
    of Shares (or Units) thatof Shares (or
    
    
    Price Paid
    
    
    of Publicly
    
    
    May Yet be PurchasedUnits)
    
    
    per Share (or
    
    
    Announced Plans or
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    Unit)
    
    
    Programs
    
    
    ProgramsShare Repurchase Program:October 2009
    
    

        
    


        
            
    November 2009
    
    
    
    
    
    
    
    
    
    
    December 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92,928,632Other:October 2009
    
    
    5,953
    (a)
    
    $
    15.58
    
    
    
    November 2009
    
    
    
    
    
    
    
    
    
    
    December 2009
    
    
    63
    (a)
    
    
    19.20
    
    
    
    6,016
    
    
    
    15.92
    
    
    
    
    
    
    
    N/ATotal
    
    
    6,016
    
    
    $
    15.92
    
    
    
    
 
 (a)
    
    Amounts represent shares withheld from employees upon the vesting of restricted stock
in order to satisfy the required tax withholding obligations. 23




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Equity Compensation Plan Information
  Stock Performance Graph
  1.
    
    $100 was invested in the Companys Common Stock, the S&P 500 Index
and the Peer Group (as defined below) on December 31, 2004 at
$45.09 per share for the Companys Common Stock and at the closing
price of the stocks comprising the S&P 500 Index and the Peer
Group, respectively, on such date.2.
    
    Peer Group investment is weighted based upon the market
capitalization of each individual company within the Peer Group at
the beginning of the period.3.
    
    Dividends are reinvested on the ex-dividend dates.
 
 Measurement Period
    
    
    
    
    
    Peer
    
    S&P 500(Fiscal Year Covered)
    
    SGY
    
    Group
    
    Index12/31/05
    
    
    100.98
    
    
    
    158.32
    
    
    
    104.9112/31/06
    
    
    78.40
    
    
    
    155.34
    
    
    
    121.4812/31/07
    
    
    104.04
    
    
    
    166.16
    
    
    
    128.1612/31/08
    
    
    24.44
    
    
    
    62.24
    
    
    
    80.7412/31/09
    
    
    40.03
    
    
    
    103.72
    
    
    
    102.11
   24




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##### Table of Contents



ITEM 6.
    
    SELECTED FINANCIAL DATA
 Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations Item 8. Financial Statements and
Supplementary Data.
 Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except per share amounts)Statement of Operations Data:Operating revenue:Oil production
    
    $
    438,942
    
    
    $
    461,050
    
    
    $
    424,205
    
    
    $
    348,979
    
    
    $
    244,469Gas production
    
    
    272,353
    
    
    
    336,665
    
    
    
    329,047
    
    
    
    337,321
    
    
    
    391,771Derivative income, net
    
    
    3,061
    
    
    
    3,327
    
    
    
    
    
    
    
    2,688
    
    
    
    Total operating revenue
    
    
    714,356
    
    
    
    801,042
    
    
    
    753,252
    
    
    
    688,988
    
    
    
    636,240Operating expenses:Lease operating expenses
    
    
    156,786
    
    
    
    171,107
    
    
    
    149,702
    
    
    
    159,043
    
    
    
    114,664Other operational expense
    
    
    2,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Production taxes
    
    
    7,920
    
    
    
    7,990
    
    
    
    9,945
    
    
    
    13,472
    
    
    
    13,179Depreciation, depletion and amortization
    
    
    259,639
    
    
    
    288,384
    
    
    
    302,739
    
    
    
    320,696
    
    
    
    241,426Write-down of oil and gas properties
    
    
    505,140
    
    
    
    1,309,403
    
    
    
    8,164
    
    
    
    510,013
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    465,985
    
    
    
    
    
    
    
    
    
    
    
    Accretion expense
    
    
    33,016
    
    
    
    17,392
    
    
    
    17,620
    
    
    
    12,391
    
    
    
    7,159Salaries, general and administrative expenses
    
    
    41,367
    
    
    
    43,504
    
    
    
    33,584
    
    
    
    34,266
    
    
    
    22,705Incentive compensation expense
    
    
    6,402
    
    
    
    2,315
    
    
    
    5,117
    
    
    
    4,356
    
    
    
    1,252Impairment of inventory
    
    
    9,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Derivative expenses, net
    
    
    
    
    
    
    
    
    
    
    666
    
    
    
    
    
    
    
    3,388Total operating expenses
    
    
    1,022,068
    
    
    
    2,306,080
    
    
    
    527,537
    
    
    
    1,054,237
    
    
    
    403,773Gain on Rocky Mountain Region properties divestiture
    
    
    
    
    
    
    
    
    
    
    59,825
    
    
    
    
    
    
    
    Income (loss) from operations
    
    
    (307,712
    )
    
    
    (1,505,038
    )
    
    
    285,540
    
    
    
    (365,249
    )
    
    
    232,467Other (income) expenses:Interest expense
    
    
    21,361
    
    
    
    13,243
    
    
    
    32,068
    
    
    
    35,931
    
    
    
    23,151Interest income
    
    
    (528
    )
    
    
    (11,250
    )
    
    
    (12,135
    )
    
    
    (2,524
    )
    
    
    (1,095
    )Other income, net
    
    
    (3,854
    )
    
    
    (5,800
    )
    
    
    (5,657
    )
    
    
    (4,657
    )
    
    
    (2,799
    )Merger expense reimbursement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,500
    )
    
    
    Merger expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,029
    
    
    
    Early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    Total other (income) expenses, net
    
    
    16,979
    
    
    
    (3,807
    )
    
    
    15,120
    
    
    
    27,279
    
    
    
    19,257Net income (loss) before income taxes
    
    
    (324,691
    )
    
    
    (1,501,231
    )
    
    
    270,420
    
    
    
    (392,528
    )
    
    
    213,210Income tax provision (benefit)
    
    
    (113,010
    )
    
    
    (363,923
    )
    
    
    88,984
    
    
    
    (138,306
    )
    
    
    76,446Net income (loss)
    
    
    (211,681
    )
    
    
    (1,137,308
    )
    
    
    181,436
    
    
    
    (254,222
    )
    
    
    136,764Net income (loss) attributable to non-controlling
interest
    
    
    27
    
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss) attributable to Stone Energy Corp.
    
    
    ($211,708
    )
    
    
    ($1,137,231
    )
    
    $
    181,436
    
    
    
    ($254,222
    )
    
    $
    136,764Earnings and dividends per common share:Basic earnings (loss) per share
    
    
    ($4.82
    )
    
    
    ($35.58
    )
    
    $
    6.50
    
    
    
    ($9.29
    )
    
    $
    5.01Diluted earnings (loss) per share
    
    
    ($4.82
    )
    
    
    ($35.58
    )
    
    $
    6.49
    
    
    
    ($9.29
    )
    
    $
    5.01Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash Flow Data:Net cash provided by operating activities
    
    $
    507,787
    
    
    $
    522,478
    
    
    $
    465,158
    
    
    $
    399,035
    
    
    $
    461,213Net cash provided by (used in) investing activities
    
    
    (316,079
    )
    
    
    (1,357,907
    )
    
    
    344,812
    
    
    
    (660,456
    )
    
    
    (499,932
    )Net cash provided by (used in) financing activities
    
    
    (190,552
    )
    
    
    428,440
    
    
    
    (393,706
    )
    
    
    240,575
    
    
    
    94,170Balance Sheet Data (at end of period):Working capital
    
    $
    26,137
    
    
    $
    123,339
    
    
    $
    412,445
    
    
    $
    1,845
    
    
    $
    16,506Oil and gas properties, net
    
    
    1,185,709
    
    
    
    1,624,321
    
    
    
    1,181,312
    
    
    
    1,784,425
    
    
    
    1,810,959Total assets
    
    
    1,454,242
    
    
    
    2,106,003
    
    
    
    1,889,603
    
    
    
    2,128,471
    
    
    
    2,140,317Long-term debt, less current potion
    
    
    575,000
    
    
    
    825,000
    
    
    
    400,000
    
    
    
    797,000
    
    
    
    563,000Stone Energy Corp. Stockholders equity
    
    
    341,950
    
    
    
    587,092
    
    
    
    885,802
    
    
    
    711,640
    
    
    
    944,123
 25




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Item 1A. Risk Factors Item 8. Financial Statements and Supplementary Data
 Note 1.
 Executive Overview
 Item 1. Business  Strategy and
Operational Overview.
 2009 Significant Events.
 
    
    Unwinding of 2009 Hedge Positions In March 2009, we unwound all of our then
existing crude oil hedges for the period from April 2009 through December 2009 and two of
our natural gas hedges for the period from April 2009 through December 2009, resulting in
proceeds of approximately $113 million. These contracts were unwound to provide a source
of liquidity to assist with funding capital expenditures, which were heavily weighted
toward the first two quarters of the year.
    
    Declining Commodity Prices- During the first quarter of 2009, we experienced declines
in oil and natural gas prices which contributed to ceiling test write-downs during the
year.
    
    Public Offering of Common Stock- In June 2009, we sold 8,050,000 shares of our common
stock in a public offering at a price of $8.00 per share resulting in net proceeds of
approximately $60.4 million after deducting underwriters discounts and offering expenses.
The net proceeds were used for general corporate purposes, including the reduction of
outstanding bank debt.
    
    Pyrenees Discovery- In June 2009, we announced a discovery on our deepwater Pyrenees
Prospect, located on Garden Banks Block 293. The well encountered approximately 125 feet of
net hydrocarbon pay in three zones. We have a 15% working interest in the prospect and a
small overriding royalty. Delineation drilling on the Pyrenees Discovery is now complete
and has provided the necessary information to appraise the three pay zones discovered in
the initial well. This represents our first deep water discovery.
    
    Bank Credit Facility Borrowing Base Redetermination On April 29, 2009, our borrowing
base was reduced from $625 million to $425 million. On October 9, 2009, the semi-annual
redetermination process was completed and our borrowing base was reaffirmed at $425
million. On January 26, 2010, we completed a public offering of $275 million aggregate
principal amount of 8.625% Senior Notes due 2017. In connection with this offering, we
entered into an amendment to our bank credit facility, under which our borrowing base was
automatically reduced from $425 million to $395 million. See   Bank Credit Facility
below for additional information regarding our senior secured bank credit facility.
 2010 Outlook.
   26




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##### Table of Contents



1 4
 Known Trends and Uncertainties.
 Hurricanes 
 Reserve Replacement
 Louisiana Franchise Taxes Item 3. Legal Proceedings.
 Liquidity and Capital Resources
  Item 1. Business  Strategy and Operational Overview.
 Cash Flow and Working Capital.
    Capital Expenditures. .
 27




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##### Table of Contents



Bank Credit Facility.
   Senior Notes Offering and Redemption of Senior Subordinated Notes. 1 4
 Share Repurchase Program.
 Hedging. Item 7A. Quantitative and Qualitative Disclosure About Market Risk  Commodity
Price Risk.
 28




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##### Table of Contents



Contractual Obligations and Other Commitments
  Lessthan
    
    
    
    
    
    
    4-5
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    Years
    
    
    5 YearsContractual Obligations and Commitments:81/4% Senior Subordinated Notes due 2011 (1)
    
    $
    200,000
    
    
    $
    
    
    
    $
    200,000
    
    
    $
    
    
    
    $
    63/4% Senior Subordinated Notes due 2014
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    Bank credit facility (2)
    
    
    175,000
    
    
    
    
    
    
    
    175,000
    
    
    
    
    
    
    
    Interest and commitment fees (3)
    
    
    108,074
    
    
    
    35,791
    
    
    
    45,875
    
    
    
    26,408
    
    
    
    Asset retirement obligations including accretion
    
    
    588,233
    
    
    
    32,000
    
    
    
    71,366
    
    
    
    112,611
    
    
    
    372,256Rig commitments
    
    
    18,905
    
    
    
    18,905
    
    
    
    
    
    
    
    
    
    
    
    Seismic data commitments (4)
    
    
    9,651
    
    
    
    9,651
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    725
    
    
    
    473
    
    
    
    193
    
    
    
    59
    
    
    
    Total Contractual Obligations and Commitments
    
    $
    1,300,588
    
    
    $
    96,820
    
    
    $
    492,434
    
    
    $
    339,078
    
    
    $
    372,256
 
 (1)
    
    The 81/4% Senior Subordinated Notes due 2011were purchased pursuant to a tender offer and consent solicitation and
redemption in January and February, 2010. On January 26, 2010, we issued $275,000 aggregate principal amount of 8.625%
Senior Notes due 2017.(2)
    
    The bank credit facility matures on July 1, 2011. See Liquidity and Capital Resources  Bank Credit Facilityabove.(3)
    
    Assumes 2.73% interest rate on the bank credit facility and 0.5% fee on unused commitments. See Liquidity and Capital
Resources  Bank Credit Facilityabove.(4)
    
    Represents pre-commitments for seismic data purchases. Results of Operations
 2009 Compared to 2008 Item 2. Properties  Oil and Natural Gas Reserves.
 Year Ended December 31,2009
    
    
    2008
    
    
    Variance
    
    
    % ChangeProduction:Oil (MBbls)
    
    
    6,207
    
    
    
    4,916
    
    
    
    1,291
    
    
    
    26
    %Natural gas (MMcf)
    
    
    41,335
    
    
    
    34,409
    
    
    
    6,926
    
    
    
    20
    %Oil and natural gas (MMcfe)
    
    
    78,577
    
    
    
    63,903
    
    
    
    14,674
    
    
    
    23
    %Average prices:(1)Oil (per Bbl)
    
    $
    70.72
    
    
    $
    93.79
    
    
    
    ($23.07
    )
    
    
    (25
    %)Natural gas (per Mcf)
    
    
    6.59
    
    
    
    9.78
    
    
    
    (3.19
    )
    
    
    (33
    %)Oil and natural gas (per Mcfe)
    
    
    9.05
    
    
    
    12.48
    
    
    
    (3.43
    )
    
    
    (27
    %)Expenses (per Mcfe):Lease operating expenses
    
    $
    2.00
    
    
    $
    2.68
    
    
    
    ($0.68
    )
    
    
    (25
    %)Salaries, general and administrative expenses (2)
    
    
    0.53
    
    
    
    0.68
    
    
    
    (0.15
    )
    
    
    (22
    %)DD&A expense on oil and gas properties
    
    
    3.23
    
    
    
    4.45
    
    
    
    (1.22
    )
    
    
    (27
    %)Estimated Proved Reserves at December 31:Oil (MBbls)
    
    
    32,336
    
    
    
    36,564
    
    
    
    (4,228
    )
    
    
    (12
    %)Natural gas (MMcf)
    
    
    216,694
    
    
    
    299,554
    
    
    
    (82,860
    )
    
    
    (28
    %)Oil and natural gas (MMcfe)
    
    
    410,711
    
    
    
    518,935
    
    
    
    (108,224
    )
    
    
    (21
    %)
 
 (1)
    
    Includes the settlement of effective hedging contracts.(2)
    
    Exclusive of incentive compensation expense.  29




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##### Table of Contents



Production .
 Prices.
  Income .
  Derivative Income/Expense.
 Expenses.
  30




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##### Table of Contents



Asset Retirement Obligations.
 Reserves.
  31




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##### Table of Contents



2008 Compared to 2007 Item 2. Properties  Oil and Natural Gas Reserves.
 Year Ended December 31,2008
    
    
    2007
    
    
    Variance
    
    
    % ChangeProduction:Oil (MBbls)
    
    
    4,916
    
    
    
    6,088
    
    
    
    (1,172
    )
    
    
    (19
    %)Natural gas (MMcf)
    
    
    34,409
    
    
    
    45,088
    
    
    
    (10,679
    )
    
    
    (24
    %)Oil and natural gas (MMcfe)
    
    
    63,903
    
    
    
    81,617
    
    
    
    (17,714
    )
    
    
    (22
    %)Average prices:(1)Oil (per Bbl)
    
    $
    93.79
    
    
    $
    69.68
    
    
    $
    24.11
    
    
    
    35
    %Natural gas (per Mcf)
    
    
    9.78
    
    
    
    7.30
    
    
    
    2.48
    
    
    
    34
    %Oil and natural gas (per Mcfe)
    
    
    12.48
    
    
    
    9.23
    
    
    
    3.25
    
    
    
    35
    %Expenses (per Mcfe):Lease operating expenses
    
    $
    2.68
    
    
    $
    1.83
    
    
    $
    0.85
    
    
    
    46
    %Salaries, general and administrative expenses (2)
    
    
    0.68
    
    
    
    0.41
    
    
    
    0.27
    
    
    
    66
    %DD&A expense on oil and gas properties
    
    
    4.45
    
    
    
    3.67
    
    
    
    0.78
    
    
    
    21
    %Estimated Proved Reserves at December 31:Oil (MBbls)
    
    
    36,564
    
    
    
    31,586
    
    
    
    4,978
    
    
    
    16
    %Natural gas (MMcf)
    
    
    299,554
    
    
    
    213,083
    
    
    
    86,471
    
    
    
    41
    %Oil and natural gas (MMcfe)
    
    
    518,935
    
    
    
    402,598
    
    
    
    116,337
    
    
    
    29
    %
 
 (1)
    
    Includes the settlement of effective hedging contracts.(2)
    
    Exclusive of incentive compensation expense. .
     Production .
 Prices.
 32




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##### Table of Contents



Income .
 Derivative Income/Expense.
 Expenses.
      33




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##### Table of Contents



Asset Retirement Obligations.
 Reserves.
  Off-Balance Sheet Arrangements
  Forward-Looking Statements
 Item 1. Business  Forward-Looking Statements Item 1A. Risk
Factors.
 Accounting Matters and Critical Accounting Policies
 Fair Value Measurements.
  Business Combinations and Goodwill.
 Asset Retirement Obligations.
 Full Cost Method.
 34




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##### Table of Contents



Derivative Instruments and Hedging Activities.
 Use of Estimates.
 
    
    remaining proved oil and gas reserves volumes and the timing of their production;
    
    estimated costs to develop and produce proved oil and gas reserves;
    
    accruals of exploration costs, development costs, operating costs and production
revenue;
    
    timing and future costs to abandon our oil and gas properties;
    
    the effectiveness and estimated fair value of derivative positions;
    
    classification of unevaluated property costs;
    
    capitalized general and administrative costs and interest;
    
    insurance recoveries related to hurricanes;
    
    estimates of fair value in business combinations;
    
    goodwill impairment testing and measurement;
    
    current income taxes; and
    
    contingencies.
 Notes to
Consolidated Financial Statements
 35




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##### Table of Contents



Recent Accounting Developments
 Financial Accounting Standards Board Accounting Standards Codification.
 Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities.
 Interim Disclosures About Fair Value of Financial Instruments.
 Subsequent Events.
 Fair Value Measurements and Disclosures (ASC Topic 820).
  Modernization of Oil and Gas Reporting.
 36




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risk
  .
  Fixed-Price SwapsNatural Gas
    
    
    OilDaily
    
    
    
    
    
    
    DailyVolume
    
    
    Swap
    
    
    Volume
    
    
    Swap(MMBtus/d)
    
    
    Price
    
    
    (Bbls/d)
    
    
    Price2010
    
    
    20,000
    
    
    $
    6.97
    
    
    
    2,000
    
    
    $
    63.002010
    
    
    20,000
    
    
    
    6.50
    
    
    
    1,000
    
    
    
    64.052010
    
    
    10,000
    
    
    
    6.50
    
    
    
    1,000
    
    
    
    60.202010
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    75.002010
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    75.252010
    
    
    
    
    
    
    
    
    
    
    4,000
    (a)
    
    
    73.652010
    
    
    
    
    
    
    
    
    
    
    2,000
    (b)
    
    
    80.102011
    
    
    10,000
    
    
    
    6.83
    
    
    
    1,000
    
    
    
    70.052011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    78.202011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    83.002011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    83.05
 
 (a)
    
    January  March(b)
    
    April  December  Interest Rate Risk
 1 4 3 4
 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  37




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   
    
    Stones disclosure controls and procedures were effective to ensure that
information required to be disclosed by Stone in the reports it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms; and
    
    Stones disclosure controls and procedures were effective to ensure that
information required to be disclosed by Stone in the reports that it files or
submits under the Securities Exchange Act of 1934 was accumulated and communicated
to Stones management, including Stones principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.
 Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control over Financial Reporting
  38




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       /s/Ernst & Young LLP 
 39




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Item 4A. Executive Officers of the Registrant
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  40




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) 1. Financial Statements:
         2. Financial Statement Schedules:
  3. Exhibits:
 3.1
    
    
    Certificate of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3.1 to the Registrants
Registration Statement on Form S-1 (Registration No. 33-62362)).3.2
    
    
    Certificate of Amendment of the Certificate of Incorporation of
Stone Energy Corporation, dated February 1, 2001 (incorporated by
reference to Exhibit 4.1 to the Registrants Form 8-K, filed
February 7, 2001).3.3
    
    
    Amended & Restated Bylaws of Stone Energy Corporation, dated May
15, 2008 (incorporated by reference to Exhibit 3.1 to the
Registrants Current Report on Form 8-K dated May 15, 2008 (File
No. 001-12074)).4.1
    
    
    Indenture between Stone Energy Corporation and JPMorgan Chase Bank,
National Association, as trustee, dated December 15, 2004
(incorporated by reference to Exhibit 4.1 to the Registrants
Current Report on Form 8-K filed on December 15, 2004.)4.2
    
    
    First Supplemental Indenture, dated August 28, 2008, to the
Indenture between Stone Energy Corporation and JPMorgan Chase Bank
dated December 10, 2001 (incorporated by reference to Exhibit 4.1
to the Registrants Current Report on Form 8-K dated August 27,
2008 (File No. 001-12074)).4.3
    
    
    First Supplemental Indenture, dated August 28, 2008, to the
Indenture between Stone Energy Corporation and JPMorgan Chase
Bank, National Association, as trustee, dated December 15, 2004
(incorporated by reference to Exhibit 4.2 to the Registrants
Current Report on Form 8-K dated August 27, 2008 (File No.
001-12074)).4.4
    
    
    Second Supplemental Indenture, dated January 26, 2010, among Stone
Energy Corporation, Stone Energy Offshore, L.L.C., and The Bank of
New York Mellon Trust Company, N.A., successor to JPMorgan Chase
Bank, as trustee (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K dated January 26, 2010
(File No. 001-12074)).4.5
    
    
    Indenture, dated January 26, 2010, among Stone Energy Corporation,
Stone Energy Offshore, L.L.C., and The Bank of New York Mellon
Trust Company, N.A., as trustee (incorporated by reference to
Exhibit 4.2 to the Registrants Current Report on Form 8-K dated
January 26, 2010 (File No. 001-12074)).
 41




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##### Table of Contents



4.6
    
    
    First Supplemental Indenture, dated January 26, 2010, among Stone
Energy Corporation, Stone Energy Offshore, L.L.C., and The Bank of
New York Mellon Trust Company, N.A., as trustee (incorporated by
reference to Exhibit 4.3 to the Registrants Current Report on Form
8-K dated January 26, 2010 (File No. 001-12074)).10.1
    
    
    Deferred Compensation and Disability Agreement between TSPC and E.
J. Louviere dated July 16, 1981 (incorporated by reference to
Exhibit 10.10 to the Registrants Annual Report on Form 10-K for
the year ended December 31, 1995 (File No. 001-12074)).10.2
    
    
    Stone Energy Corporation 2009 Amended and Restated Stock Incentive
Plan (incorporated by reference to Appendix A to the Registrants
Definitive Proxy Statement on Schedule 14A for Stones 2009 Annual
Meeting of Stockholders (File No. 001-12074)).10.3
    
    
    Stone Energy Corporation Revised (2005) Annual Incentive
Compensation Plan (incorporated by reference to Exhibit 10.11 to
the Registrants Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 001-12074)).10.4
    
    
    Stone Energy Corporation Amended and Restated Revised Annual
Incentive Compensation Plan, dated November 14, 2007 (incorporated
by reference to Exhibit 10.10 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2007 (File No.
001-12074)).10.5
    
    
    Stone Energy Corporation Deferred Compensation Plan (incorporated
by reference to Exhibit 4.5 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2004 (File No.
001-12074)).10.6
    
    
    Adoption Agreement between Fidelity Management Trust Company and
Stone Energy Corporation for the Stone Energy Corporation Deferred
Compensation Plan dated December 1, 2004 (incorporated by reference
to Exhibit 4.6 to the Registrants Annual Report on Form 10-K for
the year ended December 31, 2004 (File No. 001-12074)). 10.7
    
    
    Letter Agreement dated May 19, 2005 between Stone Energy
Corporation and Kenneth H. Beer (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed
May 24, 2005 (File No. 001-12074)).10.8
    
    
    Letter Agreement dated December 2, 2008 between Stone Energy
Corporation and David H. Welch (incorporated by reference to
Exhibit 10.8 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2008 (File No. 001-12074)).10.9
    
    
    Letter Agreement dated June 28, 2007 between Stone Energy
Corporation and Richard L. Smith (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K dated
June 28, 2007 (File No. 001-12074)).10.10
    
    
    Amendment No.1, dated as of April 28, 2009, to the Second Amended
and Restated Credit Agreement dated as of August 28, 2008, among
Stone Energy Corporation, Stone Energy Offshore, L.L.C. and the
financial institutions named therein (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed
April 30, 2009 (File No. 001-12074)).10.11
    
    
    Amendment No. 2, dated January 11, 2010, to the Second Amended and
Restated Credit Agreement dated as of August 28, 2008 (incorporated
by reference to Exhibit 4.1 to the Registrants Current Report on
Form 8-K, filed January 12, 2010 (File No. 001-12074)).10.12
    
    
    Amended and Restated Security Agreement, dated as of August 28,
2008, among Stone Energy Corporation and the other Debtors parties
hereto in favor of Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 4.5 to the Registrants
Quarterly Report on Form 10-Q for the quarter ended September 30,
2008 (File No. 001-12074)).10.13
    
    
    Stone Energy Corporation Executive Change of Control and Severance
Plan (as amended and restated effective December 31, 2008)
(incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K, filed April 8, 2009 (File No.
001-12074)).
 42




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##### Table of Contents



10.14
    
    
    Stone Energy Corporation Employee Change of Control Severance Plan
(as amended and restated) dated December 7, 2007 (incorporated by
reference to Exhibit 10.3 to the Registrants Current Report on
Form 8-K, filed December 12, 2007 (File No. 001-12074)).10.15
    
    
    Stone Energy Corporation Executive Change in Control Severance
Policy (as amended and restated) dated December 7, 2007
(incorporated by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K, filed December 12, 2007 (File No.
001-12074)).10.16
    
    
    Form of Indemnification Agreement between Stone Energy Corporation
and each of its directors and executive officers (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on
Form 8-K, filed March 27, 2009 (File No. 001-12074)).*21.1
    
    
    Subsidiaries of the Registrant.*23.1
    
    
    Consent of Independent Registered Public Accounting Firm.*23.2
    
    
    Consent of Netherland, Sewell & Associates, Inc.*31.1
    
    
    Certification of Principal Executive Officer of Stone Energy
Corporation as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934.*31.2
    
    
    Certification of Principal Financial Officer of Stone Energy
Corporation as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934.*#32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer of Stone Energy Corporation pursuant to 18 U.S.C. § 1350.*99.1
    
    
    Report of Netherland, Sewell & Associates, Inc.
 
 *
    
    Filed herewith.
    
    Identifies management contracts and compensatory plans or arrangements.#
    
    Not considered to be filed for the purposes of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section. 43




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##### Table of Contents



SIGNATURES
  STONE ENERGY CORPORATIONDate:  February 25, 2010
    By:
    /s/ David H. WelchDavid H. WelchPresident and
Chief Executive Officer  Signature
    
    Title
    
    Date/s/ David H. Welch
David H. Welch
    
    President, Chief Executive Officer and 
Director
(principal executive officer)
    
    February 25, 2010/s/ Kenneth H. Beer
Kenneth H. Beer
    
    Senior Vice President and Chief 
Financial Officer
(principal financial officer)
    
    February 25, 2010/s/ J. Kent Pierret
J. Kent Pierret
    
    Senior Vice President, Chief Accounting 
Officer and Treasurer
(principal accounting officer)
    
    February 25, 2010/s/ Robert A. Bernhard
Robert A. Bernhard
    
    Director
    
    February 25, 2010/s/ George R. Christmas
George R. Christmas
    
    Director
    
    February 25, 2010/s/ B.J. Duplantis
B.J. Duplantis
    
    Director
    
    February 25, 2010/s/ Peter D. Kinnear
Peter D. Kinnear
    
    Director
    
    February 25, 2010/s/ John P. Laborde
John P. Laborde
    
    Director
    
    February 25, 2010/s/ Richard A. Pattarozzi
Richard A. Pattarozzi
    
    Director
    
    February 25, 2010/s/ Donald E. Powell
Donald E. Powell
    
    Director
    
    February 25, 2010/s/ Kay G. Priestly
Kay G. Priestly
    
    Director
    
    February 25, 2010/s/ David R. Voelker
David R. Voelker
    
    Director
    
    February 25, 2010
 44




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheet as of December 31, 2009 and 2008
    
    
    F-3Consolidated Statement of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statement of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statement of Changes in Stockholders Equity
for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Consolidated Statement of Comprehensive Income
for the years ended December 31, 2009, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      /s/ Ernst & Young LLP 
 F-2




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##### Table of Contents



STONE ENERGY CORPORATION
 
 CONSOLIDATED BALANCE SHEET
(Amounts in thousands of dollars, except per share amounts)
 December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    69,293
    
    
    $
    68,137Accounts receivable
    
    
    118,129
    
    
    
    151,641Fair value of hedging contracts
    
    
    16,223
    
    
    
    136,072Deferred tax asset
    
    
    14,571
    
    
    
    Current income tax receivable
    
    
    
    
    
    
    31,183Inventory
    
    
    8,717
    
    
    
    35,675Other current assets
    
    
    814
    
    
    
    1,413Total current assets
    
    
    227,747
    
    
    
    424,121Oil and gas properties  United States  full cost method of
accounting:Proved, net of accumulated depreciation, depletion and
amortization of $4,536,599 and $3,766,676, respectively
    
    
    856,467
    
    
    
    1,130,583Unevaluated
    
    
    329,242
    
    
    
    493,738Building and land, net of accumulated depreciation of
$1,840 and $1,666, respectively
    
    
    5,723
    
    
    
    5,615Fixed assets, net of accumulated depreciation of $18,591 and
$16,742, respectively
    
    
    4,084
    
    
    
    5,326Other assets, net of accumulated depreciation and amortization
of $10,419 and $5,891, respectively
    
    
    29,208
    
    
    
    46,620Fair value of hedging contracts
    
    
    1,771
    
    
    
    Total assets
    
    $
    1,454,242
    
    
    $
    2,106,003Liabilities and Stockholders EquityCurrent liabilities:Accounts payable to vendors
    
    $
    66,863
    
    
    $
    144,016Undistributed oil and gas proceeds
    
    
    15,280
    
    
    
    37,882Fair value of hedging contracts
    
    
    34,859
    
    
    
    Deferred taxes
    
    
    
    
    
    
    32,416Asset retirement obligations
    
    
    30,515
    
    
    
    70,709Current income tax payable
    
    
    11,110
    
    
    
    Other current liabilities
    
    
    42,983
    
    
    
    15,759Total current liabilities
    
    
    201,610
    
    
    
    300,782Long-term debt
    
    
    575,000
    
    
    
    825,000Deferred taxes
    
    
    44,528
    
    
    
    193,924Asset retirement obligations
    
    
    265,021
    
    
    
    186,146Fair value of hedging contracts
    
    
    7,721
    
    
    
    1,221Other long-term liabilities
    
    
    18,412
    
    
    
    11,751Total liabilities
    
    
    1,112,292
    
    
    
    1,518,824Commitments and contingenciesStockholders equity:Stone Energy Corporation stockholders equity:Common stock, $.01 par value; authorized 100,000,000 shares;
issued 47,509,144 and 39,430,637 shares, respectively
    
    
    475
    
    
    
    394Treasury stock (16,582 shares, respectively, at cost)
    
    
    (860
    )
    
    
    (860
    )Additional paid-in capital
    
    
    1,324,410
    
    
    
    1,257,633Accumulated deficit
    
    
    (966,695
    )
    
    
    (754,987
    )Accumulated other comprehensive income (loss)
    
    
    (15,380
    )
    
    
    84,912Total Stone Energy Corporation stockholders equity
    
    
    341,950
    
    
    
    587,092Non-controlling interest
    
    
    
    
    
    
    87Total stockholders equity
    
    
    341,950
    
    
    
    587,179Total liabilities and stockholders equity
    
    $
    1,454,242
    
    
    $
    2,106,003
  F-3




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##### Table of Contents



STONE ENERGY CORPORATION
 
 CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share amounts)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Operating revenue:Oil production
    
    $
    438,942
    
    
    $
    461,050
    
    
    $
    424,205Gas production
    
    
    272,353
    
    
    
    336,665
    
    
    
    329,047Derivative income, net
    
    
    3,061
    
    
    
    3,327
    
    
    
    Total operating revenue
    
    
    714,356
    
    
    
    801,042
    
    
    
    753,252Operating expenses:Lease operating expenses
    
    
    156,786
    
    
    
    171,107
    
    
    
    149,702Other operational expense
    
    
    2,400
    
    
    
    
    
    
    
    Production taxes
    
    
    7,920
    
    
    
    7,990
    
    
    
    9,945Depreciation, depletion and amortization
    
    
    259,639
    
    
    
    288,384
    
    
    
    302,739Write-down of oil and gas properties
    
    
    505,140
    
    
    
    1,309,403
    
    
    
    8,164Goodwill impairment
    
    
    
    
    
    
    465,985
    
    
    
    Accretion expense
    
    
    33,016
    
    
    
    17,392
    
    
    
    17,620Salaries, general and administrative expenses
    
    
    41,367
    
    
    
    43,504
    
    
    
    33,584Incentive compensation expense
    
    
    6,402
    
    
    
    2,315
    
    
    
    5,117Impairment of inventory
    
    
    9,398
    
    
    
    
    
    
    
    Derivative expenses, net
    
    
    
    
    
    
    
    
    
    
    666Total operating expenses
    
    
    1,022,068
    
    
    
    2,306,080
    
    
    
    527,537Gain on Rocky Mountain Region properties divestiture
    
    
    
    
    
    
    
    
    
    
    59,825Income (loss) from operations
    
    
    (307,712
    )
    
    
    (1,505,038
    )
    
    
    285,540Other (income) expenses:Interest expense
    
    
    21,361
    
    
    
    13,243
    
    
    
    32,068Interest income
    
    
    (528
    )
    
    
    (11,250
    )
    
    
    (12,135
    )Other income
    
    
    (4,362
    )
    
    
    (5,800
    )
    
    
    (5,657
    )Other expense
    
    
    508
    
    
    
    
    
    
    
    Early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    844Total other (income) expenses
    
    
    16,979
    
    
    
    (3,807
    )
    
    
    15,120Net income (loss) before income taxes
    
    
    (324,691
    )
    
    
    (1,501,231
    )
    
    
    270,420Provision (benefit) for income taxes:Current
    
    
    30,376
    
    
    
    6,998
    
    
    
    95,579Deferred
    
    
    (143,386
    )
    
    
    (370,921
    )
    
    
    (6,595
    )Total income taxes
    
    
    (113,010
    )
    
    
    (363,923
    )
    
    
    88,984Net income (loss)
    
    
    (211,681
    )
    
    
    (1,137,308
    )
    
    
    181,436Less: Net income (loss) attributable to non-controlling interest
    
    
    27
    
    
    
    (77
    )
    
    
    Net income (loss) attributable to Stone Energy Corporation
    
    
    ($211,708
    )
    
    
    ($1,137,231
    )
    
    $
    181,436Basic earnings (loss) per share attributable to Stone Energy
Corporation stockholders
    
    
    ($4.82
    )
    
    
    ($35.58
    )
    
    $
    6.50Diluted earnings (loss) per share attributable to Stone Energy
Corporation stockholders
    
    
    ($4.82
    )
    
    
    ($35.58
    )
    
    $
    6.49Average shares outstanding
    
    
    43,953
    
    
    
    31,961
    
    
    
    27,612Average shares outstanding assuming dilution
    
    
    43,953
    
    
    
    31,961
    
    
    
    27,723
  F-4




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##### Table of Contents



STONE ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands of dollars)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    
    ($211,681
    )
    
    
    ($1,137,308
    )
    
    $
    181,436Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Depreciation, depletion and amortization
    
    
    259,639
    
    
    
    288,384
    
    
    
    302,739Write-down of oil and gas properties
    
    
    505,140
    
    
    
    1,309,403
    
    
    
    8,164Goodwill impairment
    
    
    
    
    
    
    465,985
    
    
    
    Impairment of inventory
    
    
    9,398
    
    
    
    
    
    
    
    Accretion expense
    
    
    33,016
    
    
    
    17,392
    
    
    
    17,620Deferred income tax benefit
    
    
    (143,386
    )
    
    
    (370,921
    )
    
    
    (6,595
    )Gain on sale of oil and gas properties
    
    
    
    
    
    
    
    
    
    
    (59,825
    )Settlement of asset retirement obligations
    
    
    (66,780
    )
    
    
    (49,242
    )
    
    
    (87,144
    )Non-cash stock compensation expense
    
    
    5,944
    
    
    
    8,405
    
    
    
    5,395Excess tax benefits
    
    
    (2
    )
    
    
    (3,045
    )
    
    
    (1,071
    )Non-cash derivative (income) expense
    
    
    5,142
    
    
    
    (2,592
    )
    
    
    666Early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    844Other non-cash expenses
    
    
    1,573
    
    
    
    1,687
    
    
    
    2,259Change in current income taxes
    
    
    66,185
    
    
    
    (87,110
    )
    
    
    58,579Decrease in accounts receivable
    
    
    50,159
    
    
    
    110,689
    
    
    
    47,549(Increase) decrease in other current assets
    
    
    627
    
    
    
    (866
    )
    
    
    (167
    )(Increase) decrease in inventory
    
    
    17,561
    
    
    
    (33,530
    )
    
    
    Increase (decrease) in accounts payable
    
    
    (10,200
    )
    
    
    24,950
    
    
    
    (900
    )Decrease in other current liabilities
    
    
    (14,431
    )
    
    
    (17,780
    )
    
    
    (4,596
    )Investment in hedging contracts
    
    
    
    
    
    
    (1,914
    )
    
    
    Other
    
    
    (117
    )
    
    
    (109
    )
    
    
    205Net cash provided by operating activities
    
    
    507,787
    
    
    
    522,478
    
    
    
    465,158Cash flows from investing activities:Acquisition of Bois dArc Energy, Inc., net of cash acquired
    
    
    
    
    
    
    (922,714
    )
    
    
    Investment in oil and gas properties
    
    
    (320,214
    )
    
    
    (446,771
    )
    
    
    (227,651
    )Proceeds from sale of oil and gas properties, net of expenses
    
    
    5,553
    
    
    
    13,339
    
    
    
    571,857Sale of fixed assets
    
    
    35
    
    
    
    4
    
    
    
    691Investment in fixed and other assets
    
    
    (1,412
    )
    
    
    (1,765
    )
    
    
    (85
    )Acquisition of non-controlling interest in subsidiary
    
    
    (41
    )
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (316,079
    )
    
    
    (1,357,907
    )
    
    
    344,812Cash flows from financing activities:Proceeds from bank borrowings
    
    
    
    
    
    
    425,000
    
    
    
    Repayments of bank borrowings
    
    
    (250,000
    )
    
    
    
    
    
    
    (172,000
    )Redemption of senior floating rate notes
    
    
    
    
    
    
    
    
    
    
    (225,000
    )Deferred financing costs
    
    
    (141
    )
    
    
    (8,766
    )
    
    
    (855
    )Excess tax benefits
    
    
    2
    
    
    
    3,045
    
    
    
    1,071Proceeds from stock offering, net of expenses
    
    
    60,447
    
    
    
    (54
    )
    
    
    Purchase of treasury stock
    
    
    (347
    )
    
    
    (6,724
    )
    
    
    Net proceeds from exercise of stock options and vesting of
restricted stock
    
    
    (513
    )
    
    
    15,939
    
    
    
    3,078Net cash provided by (used in) financing activities
    
    
    (190,552
    )
    
    
    428,440
    
    
    
    (393,706
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,156
    
    
    
    (406,989
    )
    
    
    416,264Cash and cash equivalents, beginning of year
    
    
    68,137
    
    
    
    475,126
    
    
    
    58,862Cash and cash equivalents, end of year
    
    $
    69,293
    
    
    $
    68,137
    
    
    $
    475,126Supplemental disclosures of cash flow information:Cash paid (refunded) during the year for:Interest (net of amount capitalized)
    
    $
    20,623
    
    
    $
    13,001
    
    
    $
    34,083Income taxes
    
    
    (35,920
    )
    
    
    94,109
    
    
    
    36,771
  F-5




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##### Table of Contents



STONE ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(Amounts in thousands of dollars)
 Stone Energy Corporation StockholdersAccumulated OtherAdditional Paid-In
    
    
    
    
    
    
    Comprehensive
    
    
    Non-controlling
    
    
    Total StockholdersCommon Stock
    
    
    Treasury Stock
    
    
    Capital
    
    
    Retained Earnings
    
    
    Income (Loss)
    
    
    Interest
    
    
    EquityBalance, December 31, 2006
    
    $
    276
    
    
    
    ($1,161
    )
    
    $
    502,747
    
    
    $
    200,929
    
    
    $
    8,849
    
    
    $
    
    
    
    $
    711,640Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,436
    
    
    
    
    
    
    
    
    
    
    
    181,436Adjustment for fair value
accounting of derivatives,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,584
    )
    
    
    
    
    
    
    (19,584
    )Exercise of stock options and
vesting of restricted stock
    
    
    2
    
    
    
    
    
    
    
    3,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,078Amortization of stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    8,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,774Tax benefit from stock option
exercises and restricted
stock vesting
    
    
    
    
    
    
    
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    458Balance, December 31, 2007
    
    
    278
    
    
    
    (1,161
    )
    
    
    515,055
    
    
    
    382,365
    
    
    
    (10,735
    )
    
    
    
    
    
    
    885,802Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,137,231
    )
    
    
    
    
    
    
    (77
    )
    
    
    (1,137,308
    )Adjustment for fair value
accounting of derivatives,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,647
    
    
    
    
    
    
    
    95,647Exercise of stock options and
vesting of restricted stock
    
    
    5
    
    
    
    
    
    
    
    15,934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,939Amortization of stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    12,906
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,906Tax benefit from stock option
exercises and restricted
stock vesting
    
    
    
    
    
    
    
    
    
    
    2,740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,740Non-controlling interest in
subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164
    
    
    
    164Issuance of common stock
    
    
    113
    
    
    
    
    
    
    
    717,720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    717,833Cancellation of treasury stock
    
    
    (2
    )
    
    
    
    
    
    
    (6,722
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,724
    )Issuance of treasury stock
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    (121
    )
    
    
    
    
    
    
    
    
    
    
    180Balance, December 31, 2008
    
    
    394
    
    
    
    (860
    )
    
    
    1,257,633
    
    
    
    (754,987
    )
    
    
    84,912
    
    
    
    87
    
    
    
    587,179Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (211,708
    )
    
    
    
    
    
    
    27
    
    
    
    (211,681
    )Adjustment for fair value
accounting of derivatives,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,292
    )
    
    
    
    
    
    
    (100,292
    )Acquisition of
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    (114
    )
    
    
    (41
    )Exercise of stock options and
vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    (514
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (514
    )Amortization of stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    8,845
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,845Tax deficit from stock option
exercises and restricted
stock vesting
    
    
    
    
    
    
    
    
    
    
    (1,647
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,647
    )Stock repurchase and
cancellation
    
    
    
    
    
    
    
    
    
    
    (346
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (346
    )Issuance of common stock
    
    
    81
    
    
    
    
    
    
    
    60,366
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,447Balance, December 31, 2009
    
    $
    475
    
    
    
    ($860
    )
    
    $
    1,324,410
    
    
    
    ($966,695
    )
    
    
    ($15,380
    )
    
    $
    
    
    
    $
    341,950
  F-6




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##### Table of Contents



STONE ENERGY CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Amounts in thousands of dollars)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Net income (loss)
    
    
    ($211,708
    )
    
    
    ($1,137,231
    )
    
    $
    181,436Other comprehensive income (loss) net of tax effect:Adjustment for fair value accounting of derivatives
    
    
    (100,292
    )
    
    
    95,647
    
    
    
    (19,584
    )Comprehensive income (loss)
    
    
    (312,000
    )
    
    
    (1,041,584
    )
    
    
    161,852Comprehensive income (loss) attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss) attributable to Stone
Energy Corporation
    
    
    ($312,000
    )
    
    
    ($1,041,584
    )
    
    $
    161,852
  F-7




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##### Table of Contents



STONE ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of dollars, except per share and price amounts)
 NOTE 1  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
   Basis of Presentation:
  Use of Estimates:
  Fair Value Measurements:
 Note 7  Fair Value Measurements
 Cash and Cash Equivalents:
  Oil and Gas Properties:
  F-8




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##### Table of Contents



Note 4  Investment in Oil and Gas
Properties
  Asset Retirement Obligations:
  Building and Land:
  Inventory:
  Business Combinations and Goodwill:
  F-9




---



##### Table of Contents



Earnings Per Common Share:
  Note 5  Public Offering Note 6  Acquisitions and Divestitures
  Production Revenue:
  Income Taxes:
  Derivative Instruments and Hedging Activities:
  Stock-Based Compensation:
  F-10




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##### Table of Contents



Recent Accounting Developments:
 Financial Accounting Standards Board Accounting Standards Codification.
 Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities.
 Interim Disclosures About Fair Value of Financial Instruments.
 Subsequent Events.
 Fair Value Measurements and Disclosures (ASC Topic 820).
  Modernization of Oil and Gas Reporting.
 F-11




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##### Table of Contents



NOTE 2  ACCOUNTS RECEIVABLE:
  As of December 31,2009
    
    
    2008Accounts Receivable:Other co-venturers
    
    $
    6,831
    
    
    $
    10,701Trade
    
    
    77,948
    
    
    
    87,420Insurance receivable on hurricane claims
    
    
    28,629
    
    
    
    19,899Officers and employees
    
    
    36
    
    
    
    25Unbilled accounts receivable
    
    
    4,685
    
    
    
    33,596$
    118,129
    
    
    $
    151,641
  NOTE 3  CONCENTRATIONS:
 Sales to Major Customers
  December 31,2009
    
    2008
    
    2007Chevron U.S.A., Inc.
    
    
    (a
    )
    
    
    18
    %
    
    
    19
    %Conoco, Inc.
    
    
    27
    %
    
    
    29
    %
    
    
    16
    %Hess Corporation
    
    
    11
    %
    
    
    (a
    )
    
    
    (a
    )Sequent Energy Management LP.
    
    
    13
    %
    
    
    (a
    )
    
    
    (a
    )Shell Trading (US) Company
    
    
    34
    %
    
    
    16
    %
    
    
    11
    %
 
 (a)
    
    Less than 10 percent   Production and Reserve Volumes
  Cash and Cash Equivalents
  F-12




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##### Table of Contents



NOTE 4  INVESTMENT IN OIL AND GAS PROPERTIES:
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Oil and gas properties  United States, proved and unevaluated:Balance, beginning of year
    
    $
    5,390,997
    
    
    $
    3,310,074
    
    
    $
    4,450,808Costs incurred during the year (capitalized):Acquisition costs, net of sales of unevaluated properties
    
    
    9,072
    
    
    
    1,830,468
    
    
    
    18,730Exploratory costs
    
    
    78,582
    
    
    
    146,303
    
    
    
    16,556Development costs (1)
    
    
    199,375
    
    
    
    59,586
    
    
    
    154,507Sale of Rocky Mountain Region properties
    
    
    
    
    
    
    
    
    
    
    (1,363,939
    )Salaries, general and administrative costs
    
    
    19,107
    
    
    
    19,507
    
    
    
    20,176Interest
    
    
    25,573
    
    
    
    25,195
    
    
    
    13,419Less: overhead reimbursements
    
    
    (398
    )
    
    
    (136
    )
    
    
    (183
    )Total costs incurred during the year, net of divestitures
    
    
    331,311
    
    
    
    2,080,923
    
    
    
    (1,140,734
    )Balance, end of year
    
    $
    5,722,308
    
    
    $
    5,390,997
    
    
    $
    3,310,074Accumulated depreciation, depletion and amortization (DD&A):Balance, beginning of year
    
    
    ($3,766,676
    )
    
    
    ($2,158,327
    )
    
    
    ($2,706,936
    )Provision for DD&A
    
    
    (253,790
    )
    
    
    (284,672
    )
    
    
    (299,182
    )Write-down of oil and gas properties
    
    
    (505,140
    )
    
    
    (1,278,421
    )
    
    
    Sale of proved properties
    
    
    (10,993
    )
    
    
    (45,256
    )
    
    
    847,791Balance, end of year
    
    
    ($4,536,599
    )
    
    
    ($3,766,676
    )
    
    
    ($2,158,327
    )Net capitalized costs  United States (proved and unevaluated).
    
    $
    1,185,709
    
    
    $
    1,624,321
    
    
    $
    1,151,747DD&A per Mcfe
    
    $
    3.23
    
    
    $
    4.45
    
    
    $
    3.67(1) Includes asset retirement costs of $11,607, ($96,346) and $20,171, respectively.Costs incurred during the year (expensed):Lease operating expenses
    
    $
    156,786
    
    
    $
    171,107
    
    
    $
    149,702Production taxes
    
    
    7,920
    
    
    
    7,990
    
    
    
    9,945Accretion expense
    
    
    33,016
    
    
    
    17,392
    
    
    
    17,620Expensed costs  United States
    
    $
    197,722
    
    
    $
    196,489
    
    
    $
    177,267
   2009
    
    
    2008
    
    
    2007Unevaluated oil and gas properties  United StatesNet costs incurred (evaluated) during year:Acquisition costs
    
    
    ($203,776
    )
    
    $
    308,325
    
    
    $
    29,461Exploration costs
    
    
    15,337
    
    
    
    24,531
    
    
    
    (5,396
    )Capitalized interest
    
    
    23,943
    
    
    
    10,314
    
    
    
    10,212($164,496
    )
    
    $
    343,170
    
    
    $
    34,277
 F-13




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##### Table of Contents



Year Ended December 31,2008
    
    
    2007Oil and gas properties  China:Balance, beginning of year
    
    $
    37,729
    
    
    $
    40,553Costs incurred during the year (capitalized):Exploratory costs
    
    
    226
    
    
    
    (5,590
    )Salaries, general and administrative costs
    
    
    31
    
    
    
    Interest
    
    
    1,160
    
    
    
    2,766Total costs incurred during the year
    
    
    1,417
    
    
    
    (2,824
    )Balance, end of year (fully evaluated at December 31, 2008
and unevaluated at December 31, 2007)
    
    $
    39,146
    
    
    $
    37,729Accumulated depreciation, depletion and amortization (DD&A):Balance, beginning of year
    
    
    ($8,164
    )
    
    $
    Write-down of oil and gas properties
    
    
    (30,982
    )
    
    
    (8,164
    )Balance, end of year
    
    
    ($39,146
    )
    
    
    ($8,164
    )Net capitalized costs  China
    
    $
    
    
    
    $
    29,565
  Net Costs Incurred (Evaluated) During theYear Ended December 31,Balance as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2006December 31, 2009
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    and priorAcquisition costs
    
    $
    181,429
    
    
    
    ($2,326
    )
    
    $
    164,637
    
    
    $
    8,160
    
    
    $
    10,958Exploration costs
    
    
    116,399
    
    
    
    42,691
    
    
    
    25,543
    
    
    
    24,243
    
    
    
    23,922Capitalized interest
    
    
    31,414
    
    
    
    19,163
    
    
    
    124
    
    
    
    6,958
    
    
    
    5,169Total unevaluated costs
    
    $
    329,242
    
    
    $
    59,528
    
    
    $
    190,304
    
    
    $
    39,361
    
    
    $
    40,049
  NOTE 5  PUBLIC OFFERING:
  NOTE 6  ACQUISITIONS AND DIVESTITURES:
 Acquisitions
  F-14




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##### Table of Contents



Fair value of Bois dArcs net assets:Net working capital, including cash of $15,333
    
    $
    27,865Proved oil and gas properties
    
    
    1,339,117Unevaluated oil and gas properties
    
    
    422,183Fixed and other assets
    
    
    333Goodwill
    
    
    465,985Deferred tax liability
    
    
    (467,872
    )Dismantlement reserve
    
    
    (4,239
    )Asset retirement obligations
    
    
    (127,380
    )Total fair value of net assets
    
    $
    1,655,992
  Consideration paid for Bois dArcs net assets:Cash consideration paid
    
    $
    935,425Stone common stock issued
    
    
    717,887Aggregate purchase consideration issued to Bois dArc
stockholders
    
    
    1,653,312Plus:Direct merger costs (1)
    
    
    2,680Total purchase price
    
    $
    1,655,992
 
 (1)
    
    Direct merger costs include legal and accounting fees, printing
fees, investment banking expenses and other merger-related costs.   Year EndedDecember 31,2008
    
    2007Revenues
    
    $
    1,161,761
    
    
    $
    1,108,712Income (loss) from operations
    
    
    (1,409,589
    )
    
    
    294,721Net income (loss)
    
    
    (1,083,322
    )
    
    
    179,940Basic earnings (loss) per share
    
    
    ($27.52
    )
    
    $
    4.62Diluted earnings (loss) per share
    
    
    ($27.52
    )
    
    $
    4.61
 F-15




---



##### Table of Contents



Divestitures
    Proceeds from the sale (after post-closing adjustments)
    
    $
    581,958Add: Transfer of asset retirement and other obligations
    
    
    1,823Less: Transaction costs
    
    
    (6,088
    )Carrying value of oil and gas properties
    
    
    (516,148
    )Carrying value of other assets
    
    
    (1,720
    )Net gain on sale
    
    $
    59,825
  NOTE 7  FAIR VALUE MEASUREMENTS:
  Note 13  Derivative Instruments and Hedging Activities
 F-16




---



##### Table of Contents



Fair Value Measurements at December 31, 2009Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsAssets
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money market funds
    
    $
    15,867
    
    
    $
    15,867
    
    
    $
    
    
    
    $
    Hedging contracts
    
    
    17,994
    
    
    
    
    
    
    
    17,994
    
    
    
    Total
    
    $
    33,861
    
    
    $
    15,867
    
    
    $
    17,994
    
    
    $
    
 Fair Value Measurements at December 31, 2009Quoted Prices inActive Markets for
    
    
    
    
    
    
    SignificantIdentical
    
    
    Significant Other
    
    
    UnobservableLiabilities
    
    
    Observable Inputs
    
    
    InputsLiabilities
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Hedging contracts
    
    
    ($42,580
    )
    
    $
    
    
    
    
    ($42,580
    )
    
    $
    Total
    
    
    ($42,580
    )
    
    $
    
    
    
    
    ($42,580
    )
    
    $
    
  HedgingContracts, netBalance as of January 1, 2009
    
    $
    68,123Total gains/(losses) (realized or unrealized):Included in earnings
    
    
    94,934Included in other comprehensive income
    
    
    (65,953
    )Purchases, sales, issuances and settlements
    
    
    (97,104
    )Transfers in and out of Level 3
    
    
    Balance as of December 31, 2009
    
    $
    The amount of total gains/(losses) for the period included
in earnings attributable to the change in unrealized
gain/(losses) relating to derivatives still held at
December 31, 2009
    
    $
    
 Note 6  Acquisitions and Divestitures
 1 4 3 4
 F-17




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##### Table of Contents



NOTE 8  ASSET RETIREMENT OBLIGATIONS:
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Asset retirement obligations
as of the beginning of the
year, including current
portion
    
    $
    256,855
    
    
    $
    289,790
    
    
    $
    340,376Liabilities incurred
    
    
    3,035
    
    
    
    2,779
    
    
    
    5,279Liabilities settled
    
    
    (67,858
    )
    
    
    (60,642
    )
    
    
    (86,795
    )Liabilities assumed
    
    
    
    
    
    
    128,023
    
    
    
    Divestment of properties
    
    
    (5,941
    )
    
    
    (32,890
    )
    
    
    (1,233
    )Accretion expense
    
    
    33,016
    
    
    
    17,392
    
    
    
    17,620Revision of estimates
    
    
    76,429
    
    
    
    (87,597
    )
    
    
    14,543Asset retirement obligations
as of the end of the year,
including current portion
    
    $
    295,536
    
    
    $
    256,855
    
    
    $
    289,790
   NOTE 9  INVENTORY IMPAIRMENT:
  NOTE 10  INCOME TAXES:
  As of December 31,2009
    
    
    2008Temporary differences:Oil and gas properties  full cost
    
    
    ($137,797
    )
    
    
    ($252,273
    )Hurricane insurance receivable
    
    
    (16,316
    )
    
    
    (19,373
    )Asset retirement obligations
    
    
    103,438
    
    
    
    89,812Stock compensation
    
    
    4,296
    
    
    
    4,053Hedges
    
    
    8,605
    
    
    
    (47,198
    )Other
    
    
    7,817
    
    
    
    (1,361
    )($29,957
    )
    
    
    ($226,340
    )
  F-18




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##### Table of Contents



Year Ended December 31,2009
    
    2008
    
    2007Income tax expense computed at the statutory federal income tax rate
    
    
    (35.0
    %)
    
    
    (35.0
    %)
    
    
    35.0
    %Domestic production activities deduction
    
    
    
    
    
    
    
    
    
    
    (1.6
    )State taxes and other
    
    
    0.2
    
    
    
    
    
    
    
    (0.5
    )Goodwill impairment
    
    
    
    
    
    
    10.9
    
    
    
    Statutory depletion
    
    
    
    
    
    
    (0.1
    )
    
    
    Effective income tax rate
    
    
    (34.8
    %)
    
    
    (24.2
    %)
    
    
    32.9
    %
    Total unrecognized tax benefits as of December 31, 2008
    
    $
    1,178Increases (decreases) in unrecognized tax benefits as a result of:Tax positions taken during a prior period
    
    
    24,533Tax positions taken during the current period
    
    
    Settlements with taxing authorities
    
    
    Lapse of applicable statute of limitations
    
    
    Total unrecognized tax benefits as of December 31, 2009
    
    $
    25,711
    NOTE 11  LONG-TERM DEBT:
  As of December 31,2009
    
    
    200881/4% Senior Subordinated Notes due 2011
    
    $
    200,000
    
    
    $
    200,00063/4% Senior Subordinated Notes due 2014
    
    
    200,000
    
    
    
    200,000Bank debt
    
    
    175,000
    
    
    
    425,000Total long-term debt
    
    $
    575,000
    
    
    $
    825,000
  F-19




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##### Table of Contents



3 4 pari passu 1 4
 1 4 pari passu 3 4 Note 15  Subsequent Events
 1 4 3 4
 1 4 3 4 1 4 3 4
 F-20




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##### Table of Contents



NOTE 12  STOCK-BASED COMPENSATION:
    Stock Options.
 Year Ended December 31,2009
    
    2008
    
    2007(Amounts in table represent actual values exceptwhere indicated otherwise)Stock options granted
    
    
    64,474
    
    
    
    40,000
    
    
    
    25,000Fair value of stock options granted ($ in thousands)
    
    $
    321
    
    
    $
    980
    
    
    $
    342Weighted average grant date fair value
    
    $
    4.98
    
    
    $
    24.51
    
    
    $
    13.66Assumptions:Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    44.66
    %
    
    
    37.70
    %
    
    
    33.01
    %Risk-free rate
    
    
    2.39
    %
    
    
    3.65
    %
    
    
    4.60
    %Expected option life
    
    10.0 years
    
    10.0 years
    
    6.0 yearsForfeiture rate
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
  F-21




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##### Table of Contents



Wgtd.
    
    
    
    
    
    AggregateNumber
    
    Avg.
    
    Wgtd.
    
    Intrinsicof
    
    Exercise
    
    Avg.
    
    ValueOptions
    
    Price
    
    Term
    
    (in thousands)Options outstanding, beginning of period
    
    
    510,779
    
    
    $
    45.21Granted
    
    
    64,474
    
    
    
    8.64Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Forfeited
    
    
    (14,470
    )
    
    
    33.59Expired
    
    
    (65,500
    )
    
    
    54.15Options outstanding, end of period
    
    
    495,283
    
    
    
    39.61
    
    
    4.7  years
    
    
    607Options exercisable, end of period
    
    
    363,709
    
    
    
    44.40
    
    
    4.1  years
    
    
    Options unvested, end of period
    
    
    131,574
    
    
    
    26.37
    
    
    7.3  years
    
    
    607
   Wgtd.
    
    
    
    
    
    AggregateNumber
    
    Avg.
    
    Wgtd.
    
    Intrinsicof
    
    Exercise
    
    Avg.
    
    ValueOptions
    
    Price
    
    Term
    
    (in thousands)Options outstanding, beginning of period
    
    
    931,589
    
    
    $
    43.72Granted
    
    
    40,000
    
    
    
    44.67Exercised
    
    
    (447,330
    )
    
    
    41.84
    
    
    
    
    
    
    $
    9,514Forfeited
    
    
    (13,480
    )
    
    
    54.74Expired
    
    
    
    
    
    
    Options outstanding, end of period
    
    
    510,779
    
    
    
    45.21
    
    
    5.0 years
    
    
    Options exercisable, end of period
    
    
    382,679
    
    
    
    45.34
    
    
    4.3 years
    
    
    Options unvested, end of period
    
    
    128,100
    
    
    
    44.83
    
    
    7.2 years
    
    
    
  Wgtd.
    
    
    
    
    
    AggregateNumber
    
    Avg.
    
    Wgtd.
    
    Intrinsicof
    
    Exercise
    
    Avg.
    
    ValueOptions
    
    Price
    
    Term
    
    (in thousands)Options outstanding, beginning of period
    
    
    1,394,835
    
    
    $
    42.87Granted
    
    
    25,000
    
    
    
    33.19Exercised
    
    
    (127,636
    )
    
    
    33.29
    
    
    
    
    
    
    $
    707Forfeited
    
    
    (52,490
    )
    
    
    37.42Expired
    
    
    (308,120
    )
    
    
    44.40Options outstanding, end of period
    
    
    931,589
    
    
    
    43.72
    
    
    4.7 years
    
    
    5,254Options exercisable, end of period
    
    
    736,659
    
    
    
    43.74
    
    
    4.1 years
    
    
    4,475Options unvested, end of period
    
    
    194,930
    
    
    
    43.64
    
    
    7.0 years
    
    
    779
 Restricted Stock.
 F-22




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##### Table of Contents



2009
    
    2008
    
    2007Wgtd.
    
    
    
    
    
    Wgtd.
    
    
    
    
    
    Wgtd.Number of
    
    Avg.
    
    Number of
    
    Avg.
    
    Number of
    
    Avg.Restricted
    
    Fair Value
    
    Restricted
    
    Fair Value
    
    Restricted
    
    Fair ValueShares
    
    Per Share
    
    Shares
    
    Per Share
    
    Shares
    
    Per ShareRestricted stock outstanding,
beginning of period
    
    
    408,383
    
    
    $
    43.31
    
    
    
    311,486
    
    
    $
    39.86
    
    
    
    328,447
    
    
    $
    46.97Issuances
    
    
    538,635
    
    
    
    10.83
    
    
    
    278,646
    
    
    
    47.92
    
    
    
    193,084
    
    
    
    34.06Lapse of restrictions
    
    
    (177,123
    )
    
    
    41.73
    
    
    
    (167,818
    )
    
    
    44.62
    
    
    
    (114,740
    )
    
    
    48.01Forfeitures
    
    
    (18,458
    )
    
    
    26.74
    
    
    
    (13,931
    )
    
    
    44.99
    
    
    
    (95,305
    )
    
    
    42.74Restricted stock outstanding,
end of period
    
    
    751,437
    
    
    $
    20.68
    
    
    
    408,383
    
    
    $
    43.31
    
    
    
    311,486
    
    
    $
    39.86
   NOTE 13  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:
   .
   F-23




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##### Table of Contents



Fair Value of Derivative Instruments at December 31, 2009
 Asset Derivatives

    
    Liability DerivativesDescription
    
    Balance Sheet Location
    
    Fair Value
    
    
    Balance Sheet Location
    
    Fair ValueCommodity contracts
    
    Current assets: Fair value of
    
    
    
    
    
    Current liabilities:  Fairhedging contracts
    
    $
    16,223
    
    
    value of hedging contracts
    
    
    ($34,859
    )Long-term liabilities:Long-term assets: Fair value
    
    
    
    
    
    Fair value of hedgingof hedging contracts
    
    
    1,771
    
    
    contracts
    
    
    (7,721
    )$
    17,994
    
    
    
    
    
    ($42,580
    )
 Fair Value of Derivative Instruments at December 31, 2008
 Asset Derivatives
    
    Liability DerivativesDescription
    
    Balance Sheet Location
    
    Fair Value
    
    
    Balance Sheet Location
    
    Fair ValueLong-term liabilities:Commodity contracts
    
    Current assets: Fair value of
    
    
    
    
    
    Fair value of hedginghedging contracts
    
    $
    136,072
    
    
    contracts
    
    
    ($1,221
    )$
    136,072
    
    
    
    
    
    ($1,221
    )
  The Effect of Derivative Instruments on the Statement of Operations for the Years Ended December 31, 2009, 2008 and 2007
 Amount of Gain(Loss)
    
    
    Gain (Loss) Reclassified fromDerivatives in Cash
    
    Recognized in
    
    
    Accumulated OCI into Income
    
    
    Gain (Loss) Recognized in Income onFlow Hedging
    
    OCI on
    
    
    (Effective Portion) (a)
    
    
    Derivative (Ineffective Portion)Relationships
    
    Derivative
    
    
    Location
    
    
    
    
    
    Location2009
    
    
    
    
    
    2009
    
    
    
    
    
    2009Commodity contracts
    
    $
    (100,292
    )
    
    Operating revenue-oil/gas production
    
    $
    163,176
    
    
    Derivative income(expense), net
    
    $
    3,061Total
    
    $
    (100,292
    )
    
    
    
    $
    163,176
    
    
    
    
    $
    3,0612008
    
    
    
    
    
    2008
    
    
    
    
    
    2008Commodity contracts
    
    $
    95,647
    
    
    Operating revenue - oil/gas production
    
    $
    (19,162
    )
    
    Derivative income (expense), net
    
    $
    3,327Total
    
    $
    95,647
    
    
    
    
    $
    (19,162
    )
    
    
    
    $
    3,3272007
    
    
    
    
    
    2007
    
    
    
    
    
    2007Commodity contracts
    
    $
    (19,584
    )
    
    Operating revenue - oil/gas production
    
    $
    7,884
    
    
    Derivative income (expense), net
    
    $
    (666
    )Total
    
    $
    (19,584
    )
    
    
    
    $
    7,884
    
    
    
    
    $
    (666
    )
 
 (a)
    
    For the year ended December 31, 2009, effective hedging contracts increased oil
revenue by $61,747 and increased gas revenue by $101,429. For the year ended December 31,
2008, effective hedging contracts decreased oil revenue by $34,435 and increased gas
revenue by $15,273. For the year ended December 31, 2007, effective hedging contracts
decreased oil revenue by $2,554 and increased gas revenue by $10,438. F-24




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##### Table of Contents



Fixed-Price SwapsNatural Gas
    
    OilDailyVolume
    
    Swap
    
    Daily Volume
    
    Swap(MMBtus/d)
    
    Price
    
    (Bbls/d)
    
    Price2010
    
    
    20,000
    
    
    $
    6.97
    
    
    
    2,000
    
    
    $
    63.002010
    
    
    20,000
    
    
    
    6.50
    
    
    
    1,000
    
    
    
    64.052010
    
    
    10,000
    
    
    
    6.50
    
    
    
    1,000
    
    
    
    60.202010
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    75.002010
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    75.252010
    
    
    
    
    
    
    
    
    
    
    4,000
    (a)
    
    
    73.652010
    
    
    
    
    
    
    
    
    
    
    2,000
    (b)
    
    
    80.102011
    
    
    10,000
    
    
    
    6.83
    
    
    
    1,000
    
    
    
    70.052011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    78.202011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    83.002011
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    83.05
 
 (a)
    
    January  March(b)
    
    April  December NOTE 14  SHARE REPURCHASE PROGRAM:
  NOTE 15  SUBSEQUENT EVENTS:
     F-25




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##### Table of Contents



NOTE 16  COMMITMENTS AND CONTINGENCIES:
  2010
    
    $
    4732011
    
    
    1932012
    
    
    59
      Franchise Tax Action
 Federal Securities Action.
   F-26




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##### Table of Contents



Derivative Actions. th
  Ad Valorem Tax Suit.
   F-27




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##### Table of Contents



NOTE 17  EMPLOYEE BENEFIT PLANS:
   i.
    
    The Amended and Restated Revised Annual Incentive Compensation Plan, which was adopted in
November 2007, provides for annual cash incentive bonuses that are tied to the achievement
of certain strategic objectives as defined by our board of directors on an annual basis.
Stone incurred expenses of $6,402, $2,315, and $5,117, net of amounts capitalized, for each
of the years ended December 31, 2009, 2008 and 2007, respectively, related to incentive
compensation bonuses to be paid under the revised plan.
 ii.
    
    At the 2009 Annual Meeting of Stockholders, the stockholders approved the 2009 Amended
and Restated Stock Incentive Plan (the 2009 Plan). The 2009 Plan is an amendment and
restatement of the companys 2004 Amended and Restated Stock Incentive Plan (the 2004
Plan) and it supersedes and replaces in its entirety the 2004 Plan. The 2009 Plan provides
for the granting of incentive stock options and restricted stock awards or any combination
as is best suited to the circumstances of the particular employee or nonemployee director.
The number of shares subject to the 2009 Plan was increased by 1,500,000 shares from the
4,225,000 shares of common stock to be reserved for issuance pursuant to the 2004 plan. The
2009 Plan eliminates the automatic grant of stock options or restricted stock awards to
Nonemployee Directors that was provided for in the 2004 Plan so that awards under the 2009
Plan are entirely at the discretion of the Board of Directors. Under the 2009 Plan, we may
grant both incentive stock options qualifying under Section 422 of the Internal Revenue Code
and options that are not qualified as incentive stock options to all employees and
directors. All such options must have an exercise price of not less than the fair market
value of the common stock on the date of grant and may not be re-priced without stockholder
approval. Stock options to all employees vest ratably over a five-year service-vesting
period and expire ten years subsequent to award. Stock options issued to non-employee
directors vest ratably over a three-year service-vesting period and expire ten years
subsequent to award. In addition, the 2009 Plan provides that shares available under the
2009 Plan may be granted as restricted stock. Restricted stock grants typically vest in two
or more years at the discretion of the Compensation Committee of the board of directors. At
December 31, 2009, we had approximately 1,383,755 additional shares available for issuance
pursuant to the Plan.
 iii.
    
    The Stone Energy 401(k) Profit Sharing Plan provides eligible employees with the option
to defer receipt of a portion of their compensation and we may, at our discretion, match a
portion or all of the employees deferral. The amounts held under the plan are invested in
various investment funds maintained by a third party in accordance with the directions of
each employee. An employee is 20% vested in matching contributions (if any) for each year
of service and is fully vested upon five years of service. For the years ended December 31,
2009, 2008 and 2007, Stone contributed $1,161, $1,119 and $870, respectively, to the plan.
 iv.
    
    The Stone Energy Corporation Deferred Compensation Plan provides eligible executives with
the option to defer up to 100% of their compensation for a calendar year and we may, at our
discretion, match a portion or all of the participants deferral based upon a percentage
determined by the board of directors. To date there have been no matching contributions
made by Stone. The amounts held under the plan are invested in various investment funds
maintained by a third party in accordance with the direction of each participant. At
December 31, 2009 and 2008, plan assets of $5,149 and $4,052, respectively, were included in
other assets. An equal amount of plan liabilities were included in other long-term
liabilities.
 F-28




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##### Table of Contents



v.
    
    On April 7, 2009, we amended and restated our Executive Change of Control and Severance
Plan effective as of December 31, 2008 (as so amended and restated, the Executive Plan).
The amended and restated Executive Plan also replaced and superseded our Executive Change in
Control and Severance Policy that was maintained for certain designated executives
(specifically, the CEO and CFO). The Executive Plan will provide the companys officers
that are terminated in the event of a change of control and upon certain other terminations
of employment with change of control and severance benefits as defined in the Executive
Plan. Executives who are terminated within the scope of the Executive Plan will be
entitled to certain payments and benefits including the following: a base salary up to the
date of termination; in the case of the CEO and CFO, a lump sum severance payment of 2.99
times the sum of his annual pay and any target bonus at the one hundred percent level; a
lump sum amount representing a pro rata share of the bonus opportunity up to the date of
termination at the then projected rate of payout; in the case of officers other than the CEO
and CFO and an involuntary termination occurring outside a change of control period, a lump
sum severance payment in an amount equal to the executives annual base salary; in the case
of officers other than the CEO and CFO and an involuntary termination occurring during a
change of control period, a lump sum severance payment in an amount equal to 2.99 times the
executives annual base salary; continued health plan coverage for six months and
outplacement services. In the case of the CEO and CFO, if the payments would be excess
parachute payments, they will be reduced as necessary to avoid the 20% excise tax under
Section 4999 of the Internal Revenue Code (the Code) but only if the executive is in a
better net after-tax position after such reduction. Also, if a payment would be to a key
employee for purposes of Section 409A of the Code, payment will be delayed until six months
after his termination if required to comply with Section 409A. Benefits paid upon a change
of control, without regard to whether there is a termination of employment, include the
following: lapse of restrictions on restricted stock, accelerated vesting and cash-out of
all in-the-money stock options, a 401(k) plan employer matching contribution at the rate of
50%, and a pro-rated portion of the projected bonus, if any, for the year of change of
control.On December 7, 2007, our board of directors approved and adopted the Stone Energy
Corporation Employee Change of Control Severance Plan (Employee Severance Plan), as
amended and restated to comply with the final regulations under Section 409A of the Internal
Revenue Code and to provide that said plan will remain in force and effect unless and until
terminated by the board. The Employee Severance Plan amended and restated the companys
previous Employee Change of Control Severance Plan dated November 16, 2006. The Employee
Severance Plan covers all full-time employees other than officers. Severance is triggered
by an involuntary termination of employment on and during the 6 month period following a
change of control, including a resignation by the employee relating to a change in duties.
Employees who are terminated within the scope of the Employee Severance Plan will be
entitled to certain payments and benefits including the following: a lump sum equal to (1)
his weekly pay times his full years of service, plus (2) one weeks pay for each full
$10,000 of annual pay, but the sum of (1) and (2) cannot be less than 12 weeks of pay or
greater than 52 weeks of pay; continued health plan coverage for six months; and a pro-rated
portion of the employees targeted bonus for the year. Benefits paid upon a change of
control, without regard to whether there is a termination of employment, include the
following: lapse of restrictions on restricted stock, accelerated vesting and cash-out of
all in-the-money stock options, a 401(k) plan employer matching contribution at the rate of
50%, and a lump sum cash payment equal to the product of (i) the number of restricted shares of company stock that the employee would have received under the companys stock
plan but did not receive for the time-vested portion of his long-term stock incentive award,
if any, for the calendar year in which the change of control occurs times (ii) the price per
share of the companys common stock utilized in effecting the change of control, provided
that such amount shall be prorated by multiplying such amount by the number of full months
that have elapsed from January 1 of that calendar year to the effective date of the change
of control and then dividing the result by twelve (12).
 NOTE 18  OIL AND GAS RESERVE INFORMATION  UNAUDITED:
  F-29




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##### Table of Contents



Oil andOil
    
    Natural Gas
    
    Natural Gas(MBbls)
    
    (MMcf)
    
    (MMcfe)Estimated proved reserves as of December 31, 2006
    
    
    41,360
    
    
    
    342,782
    
    
    
    590,942Revisions of previous estimates
    
    
    4,584
    
    
    
    27,183
    
    
    
    54,688Extensions, discoveries and other additions
    
    
    1,635
    
    
    
    20,765
    
    
    
    30,573Sale of reserves
    
    
    (9,905
    )
    
    
    (132,559
    )
    
    
    (191,988
    )Production
    
    
    (6,088
    )
    
    
    (45,088
    )
    
    
    (81,617
    )Estimated proved reserves as of December 31, 2007
    
    
    31,586
    
    
    
    213,083
    
    
    
    402,598Revisions of previous estimates
    
    
    (4,416
    )
    
    
    (37,509
    )
    
    
    (64,007
    )Extensions, discoveries and other additions
    
    
    625
    
    
    
    6,246
    
    
    
    9,996Purchase of producing properties
    
    
    14,680
    
    
    
    164,408
    
    
    
    252,489Sale of reserves
    
    
    (995
    )
    
    
    (12,265
    )
    
    
    (18,238
    )Production
    
    
    (4,916
    )
    
    
    (34,409
    )
    
    
    (63,903
    )Estimated proved reserves as of December 31, 2008
    
    
    36,564
    
    
    
    299,554
    
    
    
    518,935Revisions of previous estimates
    
    
    1,964
    
    
    
    (53,423
    )
    
    
    (41,636
    )Extensions, discoveries and other additions
    
    
    417
    
    
    
    12,198
    
    
    
    14,703Sale of reserves
    
    
    (402
    )
    
    
    (300
    )
    
    
    (2,714
    )Production
    
    
    (6,207
    )
    
    
    (41,335
    )
    
    
    (78,577
    )Estimated proved reserves as of December 31, 2009
    
    
    32,336
    
    
    
    216,694
    
    
    
    410,711Estimated proved developed reserves:as of December 31, 2007
    
    
    25,172
    
    
    
    171,815
    
    
    
    322,846as of December 31, 2008
    
    
    28,410
    
    
    
    227,857
    
    
    
    398,317as of December 31, 2009
    
    
    24,380
    
    
    
    172,452
    
    
    
    318,729
  Standardized Measure Year Ended December 31,2009
    
    
    2008
    
    
    2007Future cash inflows
    
    $
    2,663,285
    
    
    $
    3,210,283
    
    
    $
    4,538,017Future production costs
    
    
    (950,434
    )
    
    
    (1,131,548
    )
    
    
    (915,166
    )Future development costs
    
    
    (912,500
    )
    
    
    (1,153,950
    )
    
    
    (842,040
    )Future income taxes
    
    
    (38,845
    )
    
    
    (8,989
    )
    
    
    (734,139
    )Future net cash flows
    
    
    761,506
    
    
    
    915,796
    
    
    
    2,046,67210% annual discount
    
    
    (146,519
    )
    
    
    (122,692
    )
    
    
    (525,083
    )Standardized measure of discounted future net cash flows
    
    $
    614,987
    
    
    $
    793,104
    
    
    $
    1,521,589
 F-30




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##### Table of Contents



Changes in Standardized MeasureYear Ended December 31,2009
    
    
    2008
    
    
    2007Standardized measure at beginning of year
    
    $
    793,104
    
    
    $
    1,521,589
    
    
    $
    1,248,830Sales and transfers of oil and gas produced, net of
production costs
    
    
    (546,737
    )
    
    
    (618,618
    )
    
    
    (593,605
    )Changes in price, net of future production costs
    
    
    284,504
    
    
    
    (2,209,114
    )
    
    
    857,529Extensions and discoveries, net of future production
and development costs
    
    
    21,249
    
    
    
    37,201
    
    
    
    114,729Changes in estimated future development costs, net of
development costs incurred during the period
    
    
    183,058
    
    
    
    98,029
    
    
    
    (25,223
    )Revisions of quantity estimates
    
    
    (150,609
    )
    
    
    (220,387
    )
    
    
    363,783Accretion of discount
    
    
    79,904
    
    
    
    203,715
    
    
    
    142,605Net change in income taxes
    
    
    (27,436
    )
    
    
    509,621
    
    
    
    (338,336
    )Purchases of reserves in-place
    
    
    
    
    
    
    1,514,487
    
    
    
    Sales of reserves in-place
    
    
    3,152
    
    
    
    (45,822
    )
    
    
    (202,648
    )Changes in production rates due to timing and other
    
    
    (25,202
    )
    
    
    2,403
    
    
    
    (46,075
    )Net increase (decrease) in standardized measure
    
    
    (178,117
    )
    
    
    (728,485
    )
    
    
    272,759Standardized measure at end of year
    
    $
    614,987
    
    
    $
    793,104
    
    
    $
    1,521,589
 NOTE 19  SUMMARIZED QUARTERLY FINANCIAL INFORMATION  UNAUDITED:
 Three Months EndedMarch 31,
    
    June 30,
    
    Sept. 30,
    
    Dec. 31,2009Operating revenue
    
    $
    142,943
    
    
    $
    170,312
    
    
    $
    202,719
    
    
    $
    199,620Income (loss) from operations
    
    
    (343,368
    ) (a)
    
    
    45,679
    
    
    
    82,886
    
    
    
    (92,909
    ) (b)Net income (loss) attributable to Stone Energy
    
    
    (225,866
    ) (a)
    
    
    27,168
    
    
    
    51,053
    
    
    
    (64,063
    ) (b)Basic earnings (loss) per common share attributable to Stone Energy Corp. stockholders
    
    
    ($5.73
    )
    
    $
    0.65
    
    
    $
    1.06
    
    
    
    ($1.35
    )Diluted earnings (loss) per common share attributable to Stone Energy Corp. stockholders
    
    
    ($5.73
    )
    
    $
    0.65
    
    
    $
    1.06
    
    
    
    ($1.35
    )
 
 (a)
    
    Includes a ceiling test write-down of $340,083 before taxes ($221,054 after taxes).(b)
    
    Includes a ceiling test write-down of $165,057 before taxes ($107,287 after taxes). 2008Operating revenue
    
    $
    203,233
    
    
    $
    262,962
    
    
    $
    172,355
    
    
    $
    166,104Income (loss) from operations
    
    
    92,292
    
    
    
    124,262
    
    
    
    55,250
    
    
    
    (1,776,842
    ) (b)Net income (loss) attributable to Stone Energy
    
    
    62,242
    
    
    
    82,811
    
    
    
    34,121
    
    
    
    (1,316,405
    ) (b)Basic earnings (loss) per common share attributable to Stone Energy Corp. stockholders
    
    $
    2.24
    
    
    $
    2.95
    
    
    $
    1.05
    
    
    
    ($33.40
    )Diluted earnings (loss) per common share attributable to Stone Energy Corp. stockholders
    
    $
    2.22
    
    
    $
    2.91
    
    
    $
    1.04
    
    
    $
    (33.40
    )
 
 (b)
    
    Includes a ceiling test write-down of $1,290,544 before taxes ($838,854 after taxes) and goodwill impairment of $465,985 (no tax effect). F-31




---



##### Table of Contents



NOTE 20  GUARANTOR FINANCIAL STATEMENTS:
 1 4 3 4 Note 11  Long-Term
Debt
 CONSOLIDATING BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2009
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    64,830
    
    
    $
    3,963
    
    
    $
    500
    
    
    $
    
    
    
    $
    69,293Accounts receivable
    
    
    53,396
    
    
    
    169,053
    
    
    
    144
    
    
    
    (104,464
    )
    
    
    118,129Fair value of hedging contracts
    
    
    16,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,223Deferred tax asset
    
    
    14,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,571Inventory
    
    
    8,145
    
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    8,717Other current assets
    
    
    771
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    814Total current assets
    
    
    157,936
    
    
    
    173,631
    
    
    
    644
    
    
    
    (104,464
    )
    
    
    227,747Oil and gas properties  United States
Proved, net
    
    
    76,066
    
    
    
    774,980
    
    
    
    5,421
    
    
    
    
    
    
    
    856,467Unevaluated
    
    
    226,289
    
    
    
    102,953
    
    
    
    
    
    
    
    
    
    
    
    329,242Building and land, net
    
    
    5,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,723Fixed assets, net
    
    
    4,084
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,084Other assets, net
    
    
    29,208
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,208Fair value of hedging contracts
    
    
    1,771
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,771Investment in subsidiary
    
    
    568,794
    
    
    
    1,639
    
    
    
    
    
    
    
    (570,433
    )
    
    
    Total assets
    
    $
    1,069,871
    
    
    $
    1,053,203
    
    
    $
    6,065
    
    
    
    ($674,897
    )
    
    $
    1,454,242Liabilities and Stockholders EquityCurrent liabilities:Accounts payable to vendors
    
    $
    135,519
    
    
    $
    35,247
    
    
    $
    561
    
    
    
    ($104,464
    )
    
    $
    66,863Undistributed oil and gas proceeds
    
    
    14,828
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    15,280Fair value of hedging contracts
    
    
    34,859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,859Asset retirement obligations
    
    
    9,597
    
    
    
    20,918
    
    
    
    
    
    
    
    
    
    
    
    30,515Current income tax payable
    
    
    11,110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,110Other current liabilities
    
    
    42,224
    
    
    
    759
    
    
    
    
    
    
    
    
    
    
    
    42,983Total current liabilities
    
    
    248,137
    
    
    
    57,376
    
    
    
    561
    
    
    
    (104,464
    )
    
    
    201,610Long-term debt
    
    
    575,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    575,000Deferred taxes *
    
    
    (177,883
    )
    
    
    171,140
    
    
    
    
    
    
    
    51,271
    
    
    
    44,528Asset retirement obligations
    
    
    73,863
    
    
    
    186,545
    
    
    
    4,613
    
    
    
    
    
    
    
    265,021Fair value of hedging contracts
    
    
    7,721
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,721Other long-term liabilities
    
    
    11,699
    
    
    
    6,713
    
    
    
    
    
    
    
    
    
    
    
    18,412Total liabilities
    
    
    738,537
    
    
    
    421,774
    
    
    
    5,174
    
    
    
    (53,193
    )
    
    
    1,112,292Commitments and contingenciesStockholders equity:Common stock
    
    
    475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    475Treasury stock
    
    
    (860
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (860
    )Additional paid-in capital
    
    
    1,324,336
    
    
    
    2,016,364
    
    
    
    1,639
    
    
    
    (2,017,929
    )
    
    
    1,324,410Retained earnings (deficit)
    
    
    (977,237
    )
    
    
    (1,384,935
    )
    
    
    (748
    )
    
    
    1,396,225
    
    
    
    (966,695
    )Accumulated other comprehensive loss
    
    
    (15,380
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,380
    )Total Stone Energy stockholders equity
    
    
    331,334
    
    
    
    631,429
    
    
    
    891
    
    
    
    (621,704
    )
    
    
    341,950Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total stockholders equity
    
    
    331,334
    
    
    
    631,429
    
    
    
    891
    
    
    
    (621,704
    )
    
    
    341,950Total liabilities and stockholders
equity
    
    $
    1,069,871
    
    
    $
    1,053,203
    
    
    $
    6,065
    
    
    
    ($674,897
    )
    
    $
    1,454,242
 
 *
    
    Deferred income taxes have been allocated to guarantor subsidiary where related oil and gas
properties reside. F-32




---



##### Table of Contents



CONSOLIDATING BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2008
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    67,122
    
    
    $
    818
    
    
    $
    197
    
    
    $
    
    
    
    $
    68,137Accounts receivable
    
    
    119,918
    
    
    
    32,080
    
    
    
    99
    
    
    
    (456
    )
    
    
    151,641Fair value of hedging contracts
    
    
    136,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,072Current income tax receivable
    
    
    29,480
    
    
    
    1,703
    
    
    
    
    
    
    
    
    
    
    
    31,183Inventory
    
    
    32,965
    
    
    
    2,710
    
    
    
    
    
    
    
    
    
    
    
    35,675Other current assets
    
    
    1,356
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    1,413Total current assets
    
    
    386,913
    
    
    
    37,368
    
    
    
    296
    
    
    
    (456
    )
    
    
    424,121Oil and gas properties  United States
Proved, net
    
    
    654,048
    
    
    
    474,953
    
    
    
    1,582
    
    
    
    
    
    
    
    1,130,583Unevaluated
    
    
    218,297
    
    
    
    275,441
    
    
    
    
    
    
    
    
    
    
    
    493,738Building and land, net
    
    
    5,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,615Fixed assets, net
    
    
    5,068
    
    
    
    258
    
    
    
    
    
    
    
    
    
    
    
    5,326Other assets, net
    
    
    46,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,620Investment in subsidiary
    
    
    199,932
    
    
    
    1,475
    
    
    
    
    
    
    
    (201,407
    )
    
    
    Total assets
    
    $
    1,516,493
    
    
    $
    789,495
    
    
    $
    1,878
    
    
    
    ($201,863
    )
    
    $
    2,106,003Liabilities and Stockholders EquityCurrent liabilities:Accounts payable to vendors
    
    $
    82,129
    
    
    $
    61,582
    
    
    $
    761
    
    
    
    ($456
    )
    
    $
    144,016Undistributed oil and gas proceeds
    
    
    37,517
    
    
    
    365
    
    
    
    
    
    
    
    
    
    
    
    37,882Deferred taxes
    
    
    32,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,416Asset retirement obligations
    
    
    45,634
    
    
    
    25,075
    
    
    
    
    
    
    
    
    
    
    
    70,709Other current liabilities
    
    
    13,861
    
    
    
    1,898
    
    
    
    
    
    
    
    
    
    
    
    15,759Total current liabilities
    
    
    211,557
    
    
    
    88,920
    
    
    
    761
    
    
    
    (456
    )
    
    
    300,782Long-term debt
    
    
    825,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    825,000Deferred taxes *
    
    
    25,315
    
    
    
    117,338
    
    
    
    
    
    
    
    51,271
    
    
    
    193,924Asset retirement obligations
    
    
    133,109
    
    
    
    52,787
    
    
    
    250
    
    
    
    
    
    
    
    186,146Fair value of hedging contracts
    
    
    1,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,221Other long-term liabilities
    
    
    11,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,751Total liabilities
    
    
    1,207,953
    
    
    
    259,045
    
    
    
    1,011
    
    
    
    50,815
    
    
    
    1,518,824Commitments and contingenciesStockholders equity:Common stock
    
    
    394
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394Treasury stock
    
    
    (860
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (860
    )Additional paid-in capital
    
    
    1,257,633
    
    
    
    1,647,428
    
    
    
    1,474
    
    
    
    (1,648,902
    )
    
    
    1,257,633Retained earnings (deficit)
    
    
    (1,033,539
    )
    
    
    (1,116,978
    )
    
    
    (694
    )
    
    
    1,396,224
    
    
    
    (754,987
    )Accumulated other comprehensive income
    
    
    84,912
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,912Total Stone Energy stockholders equity
    
    
    308,540
    
    
    
    530,450
    
    
    
    780
    
    
    
    (252,678
    )
    
    
    587,092Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    87Total stockholders equity
    
    
    308,540
    
    
    
    530,450
    
    
    
    867
    
    
    
    (252,678
    )
    
    
    587,179Total liabilities and stockholders
equity
    
    $
    1,516,493
    
    
    $
    789,495
    
    
    $
    1,878
    
    
    
    ($201,863
    )
    
    $
    2,106,003
 
 *
    
    Deferred income taxes have been allocated to guarantor subsidiary where related oil and gas
properties reside. F-33




---



##### Table of Contents



CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2009
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenue:Oil production
    
    $
    136,513
    
    
    $
    302,429
    
    
    $
    
    
    
    $
    
    
    
    $
    438,942Gas production
    
    
    123,511
    
    
    
    148,842
    
    
    
    
    
    
    
    
    
    
    
    272,353Derivative income, net
    
    
    3,061
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,061Total operating revenue
    
    
    263,085
    
    
    
    451,271
    
    
    
    
    
    
    
    
    
    
    
    714,356Operating expenses:Lease operating expenses
    
    
    36,563
    
    
    
    120,223
    
    
    
    
    
    
    
    
    
    
    
    156,786Other operational expense
    
    
    2,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,400Production taxes
    
    
    6,022
    
    
    
    1,898
    
    
    
    
    
    
    
    
    
    
    
    7,920Depreciation, depletion, amortization
    
    
    47,695
    
    
    
    211,465
    
    
    
    479
    
    
    
    
    
    
    
    259,639Write-down of oil and gas properties
    
    
    
    
    
    
    505,140
    
    
    
    
    
    
    
    
    
    
    
    505,140Accretion expense
    
    
    9,768
    
    
    
    23,203
    
    
    
    45
    
    
    
    
    
    
    
    33,016Impairment of inventory
    
    
    8,342
    
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    9,398Salaries, general and administrative
    
    
    41,178
    
    
    
    184
    
    
    
    5
    
    
    
    
    
    
    
    41,367Incentive compensation expense
    
    
    6,402
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,402Total operating expenses
    
    
    158,370
    
    
    
    863,169
    
    
    
    529
    
    
    
    
    
    
    
    1,022,068Income (loss) from operations
    
    
    104,715
    
    
    
    (411,898
    )
    
    
    (529
    )
    
    
    
    
    
    
    (307,712
    )Other (income) expenses:Interest expense
    
    
    21,183
    
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    21,361Interest income
    
    
    (515
    )
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (528
    )Other (income) expense, net
    
    
    (3,524
    )
    
    
    223
    
    
    
    (553
    )
    
    
    
    
    
    
    (3,854
    )Total other (income) expenses
    
    
    17,144
    
    
    
    388
    
    
    
    (553
    )
    
    
    
    
    
    
    16,979Income (loss) before taxes
    
    
    87,571
    
    
    
    (412,286
    )
    
    
    24
    
    
    
    
    
    
    
    (324,691
    )Provision (benefit) for income taxes:Current
    
    
    30,376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,376Deferred
    
    
    892
    
    
    
    (144,278
    )
    
    
    
    
    
    
    
    
    
    
    (143,386
    )Total income taxes
    
    
    31,268
    
    
    
    (144,278
    )
    
    
    
    
    
    
    
    
    
    
    (113,010
    )56,303
    
    
    
    (268,008
    )
    
    
    24
    
    
    
    
    
    
    
    (211,681
    )Less: net income attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Net income (loss) attributable to
Stone Energy Corporation
    
    $
    56,303
    
    
    $
    (268,008
    )
    
    $
    (3
    )
    
    $
    
    
    
    $
    (211,708
    )
 F-34




---



##### Table of Contents



CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2008
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenue:Oil production
    
    $
    444,826
    
    
    $
    16,224
    
    
    $
    
    
    
    $
    
    
    
    $
    461,050Gas production
    
    
    305,637
    
    
    
    31,028
    
    
    
    
    
    
    
    
    
    
    
    336,665Derivative income, net
    
    
    3,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,327Total operating revenue
    
    
    753,790
    
    
    
    47,252
    
    
    
    
    
    
    
    
    
    
    
    801,042Operating expenses:Lease operating expenses
    
    
    142,513
    
    
    
    28,594
    
    
    
    
    
    
    
    
    
    
    
    171,107Production taxes
    
    
    7,722
    
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    7,990Depreciation, depletion, amortization
    
    
    252,021
    
    
    
    36,310
    
    
    
    53
    
    
    
    
    
    
    
    288,384Write-down of oil and gas properties
    
    
    327,891
    
    
    
    981,512
    
    
    
    
    
    
    
    
    
    
    
    1,309,403Goodwill impairment
    
    
    
    
    
    
    465,985
    
    
    
    
    
    
    
    
    
    
    
    465,985Impairment of investment in subsidiary
    
    
    1,447,497
    
    
    
    
    
    
    
    
    
    
    
    (1,447,497
    )
    
    
    Accretion expense
    
    
    15,887
    
    
    
    1,492
    
    
    
    13
    
    
    
    
    
    
    
    17,392Salaries, general and administrative
    
    
    42,949
    
    
    
    555
    
    
    
    
    
    
    
    
    
    
    
    43,504Incentive compensation expense
    
    
    2,315
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,315Total operating expenses
    
    
    2,238,795
    
    
    
    1,514,716
    
    
    
    66
    
    
    
    (1,447,497
    )
    
    
    2,306,080Income (loss) from operations
    
    
    (1,485,005
    )
    
    
    (1,467,464
    )
    
    
    (66
    )
    
    
    1,447,497
    
    
    
    (1,505,038
    )Other (income) expenses:Interest expense
    
    
    13,212
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    13,243Interest income
    
    
    (11,223
    )
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    (11,250
    )Other (income) expense, net
    
    
    (6,550
    )
    
    
    45
    
    
    
    705
    
    
    
    
    
    
    
    (5,800
    )Total other (income) expenses
    
    
    (4,561
    )
    
    
    49
    
    
    
    705
    
    
    
    
    
    
    
    (3,807
    )Income (loss) before taxes
    
    
    (1,480,444
    )
    
    
    (1,467,513
    )
    
    
    (771
    )
    
    
    1,447,497
    
    
    
    (1,501,231
    )Provision (benefit) for income taxes:Current
    
    
    6,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,998Deferred
    
    
    (71,657
    )
    
    
    (350,535
    )
    
    
    
    
    
    
    51,271
    
    
    
    (370,921
    )Total income taxes
    
    
    (64,659
    )
    
    
    (350,535
    )
    
    
    
    
    
    
    51,271
    
    
    
    (363,923
    )(1,415,785
    )
    
    
    (1,116,978
    )
    
    
    (771
    )
    
    
    1,396,226
    
    
    
    (1,137,308
    )Less: net loss attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Net income (loss) attributable to
Stone Energy Corporation
    
    $
    (1,415,785
    )
    
    $
    (1,116,978
    )
    
    $
    (694
    )
    
    $
    1,396,226
    
    
    $
    (1,137,231
    )
 F-35




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##### Table of Contents



CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2009
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    56,303
    
    
    
    ($268,008
    )
    
    $
    24
    
    
    $
    
    
    
    
    ($211,681
    )Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:Depreciation, depletion and amortization
    
    
    47,695
    
    
    
    211,465
    
    
    
    479
    
    
    
    
    
    
    
    259,639Write-down of oil and gas properties
    
    
    
    
    
    
    505,140
    
    
    
    
    
    
    
    
    
    
    
    505,140Impairment of inventory
    
    
    8,342
    
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    9,398Accretion expense
    
    
    9,768
    
    
    
    23,203
    
    
    
    45
    
    
    
    
    
    
    
    33,016Deferred income tax provision (benefit)
    
    
    892
    
    
    
    (144,278
    )
    
    
    
    
    
    
    
    
    
    
    (143,386
    )Settlement of asset retirement
obligations
    
    
    (9,364
    )
    
    
    (57,416
    )
    
    
    
    
    
    
    
    
    
    
    (66,780
    )Non-cash stock compensation expense
    
    
    5,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,944Excess tax benefits
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Non-cash derivative expense
    
    
    5,142
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,142Other non-cash expenses
    
    
    1,573
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,573Change in current income taxes
    
    
    64,481
    
    
    
    1,704
    
    
    
    
    
    
    
    
    
    
    
    66,185(Increase) decrease in accounts
receivable
    
    
    177,984
    
    
    
    (127,809
    )
    
    
    440
    
    
    
    (456
    )
    
    
    50,159Increase in other current assets
    
    
    585
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    627Increase in inventory
    
    
    16,478
    
    
    
    1,083
    
    
    
    
    
    
    
    
    
    
    
    17,561Decrease in accounts payable
    
    
    (5,652
    )
    
    
    (3,787
    )
    
    
    (761
    )
    
    
    
    
    
    
    (10,200
    )Increase in other current liabilities
    
    
    (19,448
    )
    
    
    5,017
    
    
    
    
    
    
    
    
    
    
    
    (14,431
    )Other
    
    
    739
    
    
    
    (856
    )
    
    
    
    
    
    
    
    
    
    
    (117
    )Net cash provided by operating activities
    
    
    361,460
    
    
    
    146,556
    
    
    
    227
    
    
    
    (456
    )
    
    
    507,787Cash flows from investing activities:Investment in oil and gas properties
    
    
    (177,341
    )
    
    
    (143,405
    )
    
    
    76
    
    
    
    456
    
    
    
    (320,214
    )Proceeds from sale of oil and gas
properties, net of expenses
    
    
    5,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,553Sale of fixed assets
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    35Investment in fixed and other assets
    
    
    (1,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,412
    )Acquisition of non-controlling interest
in subsidiary
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash provided by (used in) investing
activities
    
    
    (173,200
    )
    
    
    (143,411
    )
    
    
    76
    
    
    
    456
    
    
    
    (316,079
    )Cash flows from financing activities:Repayments of bank borrowings
    
    
    (250,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250,000
    )Deferred financing costs
    
    
    (141
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141
    )Excess tax benefits
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Proceeds from stock offering
    
    
    60,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,447Purchase of treasury stock
    
    
    (347
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (347
    )Net proceeds from exercise of stock
options and vesting of restricted stock
    
    
    (513
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (513
    )Net cash used in financing activities
    
    
    (190,552
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190,552
    )Net increase (decrease) in cash and cash
equivalents
    
    
    (2,292
    )
    
    
    3,145
    
    
    
    303
    
    
    
    
    
    
    
    1,156Cash and cash equivalents, beginning of
period
    
    
    67,122
    
    
    
    818
    
    
    
    197
    
    
    
    
    
    
    
    68,137Cash and cash equivalents, end of period
    
    $
    64,830
    
    
    $
    3,963
    
    
    $
    500
    
    
    $
    
    
    
    $
    69,293
 F-36




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##### Table of Contents



CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2008
(In thousands of dollars)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiary
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (1,415,785
    )
    
    $
    (1,116,978
    )
    
    $
    (771
    )
    
    $
    1,396,226
    
    
    $
    (1,137,308
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation, depletion and amortization
    
    
    252,021
    
    
    
    36,310
    
    
    
    53
    
    
    
    
    
    
    
    288,384Write-down of oil and gas properties
    
    
    327,891
    
    
    
    981,512
    
    
    
    
    
    
    
    
    
    
    
    1,309,403Goodwill impairment
    
    
    
    
    
    
    465,985
    
    
    
    
    
    
    
    
    
    
    
    465,985Impairment of investment in subsidiary
    
    
    1,447,497
    
    
    
    
    
    
    
    
    
    
    
    (1,447,497
    )
    
    
    Accretion expense
    
    
    15,887
    
    
    
    1,492
    
    
    
    13
    
    
    
    
    
    
    
    17,392Deferred income tax benefit
    
    
    (71,657
    )
    
    
    (350,535
    )
    
    
    
    
    
    
    51,271
    
    
    
    (370,921
    )Settlement of asset retirement obligations
    
    
    (47,617
    )
    
    
    (1,625
    )
    
    
    
    
    
    
    
    
    
    
    (49,242
    )Non-cash stock compensation expense
    
    
    8,405
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,405Excess tax benefits
    
    
    (3,045
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,045
    )Non-cash derivative expense
    
    
    (2,592
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,592
    )Other non-cash expenses
    
    
    1,687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,687Decrease in current income taxes payable
    
    
    (87,110
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,110
    )(Increase) decrease in accounts receivable
    
    
    70,983
    
    
    
    39,182
    
    
    
    68
    
    
    
    456
    
    
    
    110,689Increase in other current assets
    
    
    (824
    )
    
    
    (42
    )
    
    
    
    
    
    
    
    
    
    
    (866
    )Increase in inventory
    
    
    (32,965
    )
    
    
    (565
    )
    
    
    
    
    
    
    
    
    
    
    (33,530
    )Decrease in accounts payable
    
    
    12,718
    
    
    
    11,455
    
    
    
    777
    
    
    
    
    
    
    
    24,950Increase in other current liabilities
    
    
    (299
    )
    
    
    (17,481
    )
    
    
    
    
    
    
    
    
    
    
    (17,780
    )Investment in hedging contracts
    
    
    (1,914
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,914
    )Other
    
    
    3,724
    
    
    
    (3,833
    )
    
    
    
    
    
    
    
    
    
    
    (109
    )Net cash provided by operating activities
    
    
    477,005
    
    
    
    44,877
    
    
    
    140
    
    
    
    456
    
    
    
    522,478Cash flows from investing activities:Acquisition of Bois dArc Energy, Inc.
    
    
    (929,542
    )
    
    
    6,771
    
    
    
    57
    
    
    
    
    
    
    
    (922,714
    )Investment in oil and gas properties
    
    
    (395,848
    )
    
    
    (50,467
    )
    
    
    
    
    
    
    (456
    )
    
    
    (446,771
    )Proceeds from sale of oil and gas properties, net of expenses
    
    
    13,339
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,339Sale of fixed assets
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Investment in fixed and other assets
    
    
    (1,402
    )
    
    
    (363
    )
    
    
    
    
    
    
    
    
    
    
    (1,765
    )Net cash provided by (used in) investing activities
    
    
    (1,313,449
    )
    
    
    (44,059
    )
    
    
    57
    
    
    
    (456
    )
    
    
    (1,357,907
    )Cash flows from financing activities:Proceeds from bank borrowings
    
    
    425,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425,000Deferred financing costs
    
    
    (8,766
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,766
    )Excess tax benefits
    
    
    3,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,045Expenses for stock offering
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Purchase of treasury stock
    
    
    (6,724
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,724
    )Net proceeds from exercise of stock options and vesting of restricted stock
    
    
    15,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,939Net cash provided by financing activities
    
    
    428,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    428,440Net increase (decrease) in cash and cash equivalents
    
    
    (408,004
    )
    
    
    818
    
    
    
    197
    
    
    
    
    
    
    
    (406,989
    )Cash and cash equivalents, beginning of period
    
    
    475,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    475,126Cash and cash equivalents, end of period
    
    $
    67,122
    
    
    $
    818
    
    
    $
    197
    
    
    $
    
    
    
    $
    68,137
 F-37




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##### Table of Contents



GLOSSARY OF CERTAIN INDUSTRY TERMS
  Bcf
 Bcfe.
 Bbl
 Btu.
 Development well
 Exploratory well
 Field. structural feature stratigraphic condition
 Gross acreage or gross wells
 LIBOR
 Liquidity.
 MBbls
 Mcf
 Mcfe
 MMBbls
 MMBtu.
 MMcf
 MMcfe
 Make-Whole Amount 1 4
 G-1




---



##### Table of Contents



Net acres or net wells
 Overriding royalty interest
 Pari Passu
 Primary term lease.
 Productive well
 Proved developed reserves
 Proved oil and gas reserves
 Proved undeveloped reserves
 Standardized measure of discounted future net cash flows.
 Undeveloped acreage
 Working interest
 G-2




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description3.1
    
    
    Certificate of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-1
(Registration No. 33-62362)).3.2
    
    
    Certificate of Amendment of the Certificate of
Incorporation of Stone Energy Corporation, dated February
1, 2001 (incorporated by reference to Exhibit 4.1 to the
Registrants Form 8-K, filed February 7, 2001).3.3
    
    
    Amended & Restated Bylaws of Stone Energy Corporation,
dated May 15, 2008 (incorporated by reference to Exhibit
3.1 to the Registrants Current Report on Form 8-K dated
May 15, 2008 (File No. 001-12074)).4.1
    
    
    Indenture between Stone Energy Corporation and JPMorgan
Chase Bank, National Association, as trustee, dated
December 15, 2004 (incorporated by reference to Exhibit 4.1
to the Registrants Current Report on Form 8-K filed on
December 15, 2004.)4.2
    
    
    First Supplemental Indenture, dated August 28, 2008, to the
Indenture between Stone Energy Corporation and JPMorgan
Chase Bank dated December 10, 2001 (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K dated August 27, 2008 (File No. 001-12074)).4.3
    
    
    First Supplemental Indenture, dated August 28, 2008, to the
Indenture between Stone Energy Corporation and JPMorgan
Chase Bank, National Association, as trustee, dated
December 15, 2004 (incorporated by reference to Exhibit 4.2
to the Registrants Current Report on Form 8-K dated August
27, 2008 (File No. 001-12074)).4.4
    
    
    Second Supplemental Indenture, dated January 26, 2010,
among Stone Energy Corporation, Stone Energy Offshore,
L.L.C., and The Bank of New York Mellon Trust Company,
N.A., successor to JPMorgan Chase Bank, as trustee
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K dated January 26,
2010 (File No. 001-12074)).4.5
    
    
    Indenture, dated January 26, 2010, among Stone Energy
Corporation, Stone Energy Offshore, L.L.C., and The Bank of
New York Mellon Trust Company, N.A., as trustee
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K dated January 26,
2010 (File No. 001-12074)).4.6
    
    
    First Supplemental Indenture, dated January 26, 2010, among
Stone Energy Corporation, Stone Energy Offshore, L.L.C.,
and The Bank of New York Mellon Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on Form 8-K dated January 26,
2010 (File No. 001-12074)).10.1
    
    
    Deferred Compensation and Disability Agreement between TSPC
and E. J. Louviere dated July 16, 1981 (incorporated by
reference to Exhibit 10.10 to the Registrants Annual
Report on Form 10-K for the year ended December 31, 1995
(File No. 001-12074)).10.2
    
    
    Stone Energy Corporation 2009 Amended and Restated Stock
Incentive Plan (incorporated by reference to Appendix A to
the Registrants Definitive Proxy Statement on Schedule 14A
for Stones 2009 Annual Meeting of Stockholders (File No.
001-12074)).10.3
    
    
    Stone Energy Corporation Revised (2005) Annual Incentive
Compensation Plan (incorporated by reference to Exhibit
10.11 to the Registrants Annual Report on Form 10-K for
the year ended December 31, 2004 (File No. 001-12074)).10.4
    
    
    Stone Energy Corporation Amended and Restated Revised
Annual Incentive Compensation Plan, dated November 14, 2007
(incorporated by reference to Exhibit 10.10 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2007 (File No. 001-12074)).




---



##### Table of Contents



Exhibit Number
    
    Description10.5
    
    
    Stone Energy Corporation Deferred Compensation Plan
(incorporated by reference to Exhibit 4.5 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 001-12074)).10.6
    
    
    Adoption Agreement between Fidelity Management Trust
Company and Stone Energy Corporation for the Stone Energy
Corporation Deferred Compensation Plan dated December 1,
2004 (incorporated by reference to Exhibit 4.6 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 001-12074)). 10.7
    
    
    Letter Agreement dated May 19, 2005 between Stone Energy
Corporation and Kenneth H. Beer (incorporated by reference
to Exhibit 10.1 to the Registrants Current Report on Form
8-K, filed May 24, 2005 (File No. 001-12074)).10.8
    
    
    Letter Agreement dated December 2, 2008 between Stone
Energy Corporation and David H. Welch (incorporated by
reference to Exhibit 10.8 to the Registrants Annual Report
on Form 10-K for the year ended December 31, 2008 (File No.
001-12074)).10.9
    
    
    Letter Agreement dated June 28, 2007 between Stone Energy
Corporation and Richard L. Smith (incorporated by reference
to Exhibit 10.1 to the Registrants Current Report on Form
8-K dated June 28, 2007 (File No. 001-12074)).10.10
    
    
    Amendment No.1, dated as of April 28, 2009, to the Second
Amended and Restated Credit Agreement dated as of August
28, 2008, among Stone Energy Corporation, Stone Energy
Offshore, L.L.C. and the financial institutions named
therein (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed April 30,
2009 (File No. 001-12074)).10.11
    
    
    Amendment No. 2, dated as of January 11, 2010, to the
Second Amended and Restated Credit Agreement dated as of
August 28, 2008 (incorporated by reference to Exhibit 4.1
to the Registrants Current Report on Form 8-K, filed
January 12, 2010 (File No. 001-12074)).10.12
    
    
    Amended and Restated Security Agreement, dated as of August
28, 2008, among Stone Energy Corporation and the other
Debtors parties hereto in favor of Bank of America, N.A.,
as Administrative Agent (incorporated by reference to
Exhibit 4.5 to the Registrants Quarterly Report on Form
10-Q for the quarter ended September 30, 2008 (File No.
001-12074)).10.13
    
    
    Stone Energy Corporation Executive Change of Control and
Severance Plan (as amended and restated effective December
31, 2008) (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed April 8,
2009 (File No. 001-12074)).10.14
    
    
    Stone Energy Corporation Employee Change of Control
Severance Plan (as amended and restated) dated December 7,
2007 (incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K, filed December 12,
2007 (File No. 001-12074)).10.15
    
    
    Stone Energy Corporation Executive Change in Control
Severance Policy (as amended and restated) dated December
7, 2007 (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed December 12,
2007 (File No. 001-12074)).10.16
    
    
    Form of Indemnification Agreement between Stone Energy
Corporation and each of its directors and executive
officers (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K, filed March 27,
2009 (File No. 001-12074)).*21.1
    
    
    Subsidiaries of the Registrant.*23.1
    
    
    Consent of Independent Registered Public Accounting Firm.*23.2
    
    
    Consent of Netherland, Sewell & Associates, Inc.




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##### Table of Contents



Exhibit Number
    
    Description*31.1
    
    
    Certification of Principal Executive Officer of Stone
Energy Corporation as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934.*31.2
    
    
    Certification of Principal Financial Officer of Stone
Energy Corporation as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934.*#32.1
    
    
    Certification of Chief Executive Officer and Chief
Financial Officer of Stone Energy Corporation pursuant to
18 U.S.C. § 1350.*99.1
    
    
    Report of Netherland, Sewell & Associates, Inc.
 
 *
    
    Filed herewith.
    
    Identifies management contracts and compensatory plans or arrangements.#
    
    Not considered to be filed for the purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section.