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TEXT-S&P revises Stone Energy recovery ratings to '3'
March 20, 2012 / 7:57 PM / in 6 years

TEXT-S&P revises Stone Energy recovery ratings to '3'

March 20 - Standard & Poor's Ratings Services today said it revised its
recovery rating on Lafayette, La.-based Stone Energy Corp.'s senior
unsecured notes to '3' from '4', indicating our expectation of meaningful (50%
to 70%) recovery in the event of a payment default. The 'B' issue rating on the
senior unsecured notes remains unchanged. Our recovery and issue-level ratings
on Stone's subordinated notes remain unchanged. 	
	
The improved recovery expectation reflects an updated higher valuation of 	
Stone's year-end 2011 reserves and the recently issued $300 million 	
convertible debt. Our reserve valuation for Stone is based on a company 	
provided PV10 report using stress-level price assumptions of $45 per barrel of 	
West Texas Intermediate crude oil and $4.00 per million BTU of Henry Hub 	
natural gas. We expect the newly issued convertible notes to be pari passu 	
with Stone's existing senior unsecured notes and senior to Stone's existing 	
subordinated notes in a default scenario. A higher PV10 valuation for Stone 	
more than offsets the adverse recovery impact of additional pari passu senior 	
unsecured debt and results in a revision of our recovery rating to '3'.	
The corporate credit rating and stable outlook on Stone Energy Corp. reflect 	
the company's limited scale, geographic concentration in the mature U.S. Gulf 	
of Mexico shelf region, weak internal reserve replacement, and relatively high 	
finding and development (F&D) costs. Our rating on Stone also reflects the 	
favorable outlook for crude oil prices, the company's adequate liquidity 	
position, and its healthy credit metrics. 	
	
RELATED RESEARCH AND CRITERIA	
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011	
     -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009.	
     -- Corporate Ratings Criteria 2008, published April 15, 2008.	
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 	
May 27, 2009	
	
	
RATINGS LIST	
Stone Energy Corp.	
 Corporate credit rating             B/Stable/--	
	
                                     To           From 	
Revised Recovery Rating	
 Senior unsecured notes              B            B	
  Recovery rating                    3            4	
	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.

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