Stone Energy Corp Com (NYSE:SGY)

CAPS Rating: 1 out of 5

An independent oil and natural gas company engaged in the acquisition and exploration, development, operation and production of oil and gas properties located in the Gulf of Mexico.

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All Players

419 Outperform
45 Underperform
 

All-Star Players

50 Outperform
26 Underperform
 

Wall Street

8 Outperform
2 Underperform
 

Top SGY Bull/Bear Pitches

The best Bull and Bear pitches based on recency and number of recommendations.

ValueDragonStyle (66.78)
Submitted August 03, 2010

Stone Energy Corp (SGY)An independent oil and natural gas company engaged in the acquisition and exploration, development, operation and production of oil and gas properties located in the Gulf of Mexico. Currently, SGY is down 41% from its 52W high,… More

jed71 (99.43)
Submitted March 15, 2017

A bankrupt oil and gas driller? Could you get any more volatile than that? This stub has been on a tear lately, and I’m not sure the price appreciation deserved. In fact, I am downright convinced that this is severely overpriced. The equity here has… More

SGY VS S&P 500 (SPY)

Recent Community Commentary

Read the most recent pitches from players about SGY.

Recs

4
Member Avatar jed71 (99.43) Submitted: 3/15/2017 11:50:27 AM : Underperform Start Price: $20.64 SGY Score: -54.22

A bankrupt oil and gas driller? Could you get any more volatile than that? This stub has been on a tear lately, and I’m not sure the price appreciation deserved. In fact, I am downright convinced that this is severely overpriced. The equity here has been a hard one to assign a share price, but I have taken a shot at valuing what remains. I am not suggesting a long or short position in this equity, mostly I am making assumptions and the volatility here is so high. But since it represents a greater than 50% haircut possibility, it qualifies to be on my Caps portfolio, warts and all.

The first thing I had to do was through their bankruptcy documents which was no small task. Key recent section:

“As previously disclosed, under the Plan, assuming emergence on the Effective Date of February 28, 2017, pre-petition holders of the Company's unsecured notes will receive 19.0 million New Common Shares, representing 95% of the New Common Shares. The pre-petition stockholders will receive 1.0 million New Common Shares, or an equivalent of an approximate 1-for-5.674558 reverse stock split (or 0.176263 New Common Shares for each 1 share of Existing Shares), representing 5% of the New Common Shares. Additionally, the pre-petition stockholders will receive Warrants to purchase 3,529,412 New Common Shares, or approximately 3.529412 Warrants for each 1 New Common Share. This would equate to 0.622009 Warrants for each 1 Existing Share (each based on 5,674,558 Existing Shares issued and outstanding and subject to rounding). The Warrants have an exercise price of $42.04 per share, as the same may be adjusted pursuant to the terms of the Warrants, and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company.”

The existing shareholders receive 5% of the equity in the company when the company emerges from bankruptcy. That is what is currently being traded in the market – the remaining existing shares totaling 1MM. I don’t really see where there is any value in the warrants to common shareholders, especially since they are valued so highly out of the money, but the market seems to disagree with me given they are priced at $3.91 as of today. The major part I am struggling to reconcile is the existing senior bonds are priced at $0.70 on the dollar whereas the stock seems valued so much higher than that. I tend to think bondholders are more correct than stockholders, but maybe that’s my personal bias.

If you comb through the bankruptcy docs, the senior bondholders have been promised a few things: $100MM in cash, $225MM in second lien notes, and 95% of the new equity once the company emerges from bankruptcy. If we look at this from a bondholder perspective:

Current value of senior bonds @ $0.70 of par: $545MM
Less…. New second lien bonds @ $0.98 of par: $221MM
Less…. Cash payment: $100MM
95% of equity is valued by bondholders: $224MM

Before we assign a final value to existing shares, though, there are two more pieces to this puzzle. There is a relatively large employee equity stock plan that would be effective almost immediately after bankruptcy discharge. I am estimating it to be around 10% dilution to the new stockholders (this is simply an estimate). There are also some warrants that were issued to the shareholders, which will eat away at the equity value here. The warrant value should be considered “future equity” because this is the value of POTENTIAL equity that may / may not be purchased by shareholders over the next four years as the warrants expire.

95% of equity value: $224MM
Less Employee stock plan dilution: $22MM
Warrants at $3.91 per warrant: $13MM
Market value at 95%: $188MM

Existing equity value of the remaining 5% common shares (1MM shares) that are being traded = $9.4MM

Current share price: $20.64
Share price assigned by bondholders: $9.42

That’s a close to 54% decline from the current share price. And I think I am being conservative since I am not taking into account factors such as their new line of credit borrowings, possibility they might issue more shares to recapitalize the business, recent declines in oil prices, possible cuts to their natural resource assets and the MASSIVE negative equity they will still have when they emerge from bankruptcy. I think I am being more than generous with my $9 per share but this is a bit of an exercise in valuation for me. I really just want to see if this plays out the way I think it will and Caps provides a good way for me to document and then recheck later to see if I was right.

Recs

0
Member Avatar Ambizush (36.87) Submitted: 1/4/2017 3:50:25 PM : Outperform Start Price: $40.00 SGY Score: -34.72

Now that Trump is in office, the oilfield should come up some. Stone trimmed a lot of the top salaries and should slowly rebount *slowly*

Recs

0
Member Avatar warrenout (99.30) Submitted: 10/26/2016 12:11:54 PM : Underperform Start Price: $24.11 SGY Score: -16.62

Don't think this is going well.

Why?

Doesn't matter.

Why?

Cash flow says it all.

You're not Donald Trump then!?

Not even on my worst days.

Leaderboard

Find the members with the highest scoring picks in SGY.

Score Leader

teufelhunden62

teufelhunden62 (94.24) Score: +459.81

The Score Leader is the player with the highest score across all their picks in SGY.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
Index
Gain
Score Commentary
flannelb 22.47 7/8/2009 Underperform 1Y $349.43 -89.84% +220.22% +310.06 0 Comment
SAILORMAN1 65.35 11/10/2008 Underperform NS $1,448.86 -97.55% +201.52% +299.07 0 Comment
jwalravens 25.93 8/31/2009 Underperform 5Y $732.95 -95.16% +174.60% +269.76 0 Comment
jeanWalravens 20.97 9/15/2009 Underperform 5Y $917.61 -96.13% +166.49% +262.62 0 Comment
MSFOBV1YH 97.43 11/5/2009 Underperform 5Y $1,084.66 -96.73% +164.70% +261.43 0 Comment
This player feels very strongly about this pick and has marked it a Top Pick. Top Picks do not affect a player’s score. dannp < 20 9/16/2008 Underperform 3Y $2,262.50 -98.43% +146.09% +244.52 0 Comment
jroren 98.81 6/21/2010 Underperform 3M $823.86 -95.69% +147.24% +242.93 0 Comment
TonTrader 78.05 10/8/2010 Underperform 3W $915.91 -96.13% +140.22% +236.34 0 Comment
octoberfast 96.98 10/15/2010 Underperform 5Y $963.64 -96.32% +136.46% +232.77 0 Comment
csm47362 < 20 7/7/2008 Underperform 5Y $3,550.28 -99.00% +127.47% +226.47 0 Comment

Wall Street

See what the Wall Street professionals think, according to their public statements and filings.

Player Name Player
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
S&P
Gain
Score End Date Commentary
TrackJimCramer 85.62 5/18/2015 Underperform 3W $818.18 -95.66% +31.24% +126.91 0 Comment
TrackUltraLong < 20 2/25/2013 Outperform NS $1,217.05 -97.08% +83.24% -180.32 1 Comment
TrackZacks < 20 12/30/2011 Outperform 3M $1,498.86 -8.42% +8.06% -16.47 5/11/2012 @ $1,372.73 1 Comment
TrackBarclaysCap 91.06 11/14/2011 Outperform NS $1,515.91 -97.66% +123.30% -220.96 0 Comment
trackglobalhunte < 20 10/26/2011 Outperform NS $1,282.95 -97.23% +124.91% -222.15 0 Comment
TrackLadenburg < 20 10/4/2011 Outperform NS $896.02 -96.04% +153.72% -249.76 0 Comment
TrackDahlmanRose < 20 7/18/2011 Outperform NS $1,786.93 -98.01% +113.37% -211.38 0 Comment
TrackRodmanRen < 20 4/13/2011 Outperform NS $1,813.07 -98.04% +111.75% -209.79 0 Comment
trackhowardweil < 20 11/4/2010 Outperform NS $989.77 -96.41% +130.61% -227.02 0 Comment
TrackCapitalOne < 20 1/27/2010 Outperform NS $932.95 -3.17% +7.87% -11.04 10/20/2010 @ $903.41 0 Comment
TrackCapitalOne < 20 2/19/2009 Outperform NS $327.84 +247.31% +36.65% +210.66 11/9/2009 @ $1,138.64 0 Comment
TrackCapitalOne < 20 1/12/2009 Outperform NS $647.16 -32.13% -3.18% -28.95 2/10/2009 @ $439.20 0 Comment
TrackFBRCapitalM 88.51 12/8/2008 Underperform NS $677.27 -94.76% +215.93% +310.69 0 Comment
TrackBofASec 92.39 8/12/2008 Outperform NS $2,669.89 -98.67% +121.46% -220.13 0 Comment
TrackZacks < 20 8/7/2008 Outperform 3M $2,659.66 -90.49% -32.44% -58.06 4/11/2009 @ $252.84 1 Comment
TrackFBRCapitalM 88.51 9/7/2007 Outperform NS $1,962.50 +22.90% -8.18% +31.08 2/15/2008 @ $2,411.93 0 Comment
TrackMatrix < 20 3/28/2007 Underperform NS $1,664.77 -10.38% -2.86% +7.51 4/17/2012 @ $1,492.05 0 Comment

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