Good morning. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to the Stone Energy first quarter 2015 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. [Operator Instructions] Thank you. David Welch, Chairman and CEO of Stone Energy, you may begin your conference

Thank you, John. Good morning and welcome once again everyone to our first quarter 2015 earnings conference call. This morning we’re joined by Ken Beer, our Executive Vice President and Chief Financial Officer. Ken will read our cautionary statement and review our financial performance for the quarter, then turn it back over to me to provide you with some color on our strategy operations update and a status report on our response low price environment. Ken, to you?

Thank you, David. Let me first start off with just this forward-looking statement. In this conference call, we may make forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to all the risks and uncertainties normally incident to exploration, development, production and sales, of oil and natural gas. We urge you to read our 2014 annual report on Form 10-K and the soon to be filed first quarter 10-Q, for discussion of the risks that could cause our actual results to differ materially from any of those made in the forward-looking statements we may make today. In addition, in this call we may refer to financial measures that may be deemed to be non-GAAP financial measures as defined under the Exchange Act. Please refer to the press release we issued yesterday for a reconciliation of the differences between these financial measures and the most directly comparable GAAP financial measures. With this we’ll assume people would have seen the press release and the attached financials, additionally our focus on some of the financial and operational highlights. Our first quarter results showed an adjusted $13 million loss or a loss of $0.23 per share before and after tax noncash impairment charge of $314 million, which brought the reported loss to $327 million. Our discretionary cash flow for the quarter was around $85 million or about $1.50 per share which was above the first call consensus driven primarily by greater than expected production and lower cost. As results were discussed in last quarter’s conference call, the noncash ceiling test impairment was primarily to lower net oil and gas and NGL prices, which were calculated using a rolling twelve month trailing average. The prices continued to stay at a lower…

Okay, thank you very much, Ken. No doubt our industry is facing some major headwinds, but we’re adjusting to the current reality while believing in the longer term viability of the exploration and production business and are still excited about our prospects for the future. Our short term response has been a reduced capital as much as 50%, a reduced lease operating expense by up to 40% and lower our SG&A by 10%, while at the same time positioning ourselves for the future by being almost exclusively [ph] invested in two of the lowest non-OPEC oil and gas supply basins, the deep water of Gulf of Mexico and Appalachia. We’re temporarily surveying [ph] our Appalachian investment are waiting to reduce differentials in allocating most of our capital right now to the deep water of Gulf, where we expect to shortly commence drilling operations with the Ensco 8503 deep water drilling in completion rig. We were fortunate to complete the divestiture of essentially all of our noncore properties by the summer of 2014, before prices dropped and this helped to restructure our company into a much lower cost operation. We also issued equity in May of last year, which improved our liquidity such that we’re in a relatively strong position having significant cash on the balance sheet and an undrawn $0.5 billion revolver. Thirdly, we’ve made a huge discovery in the Utica, Appalachia at the end of 2014, which should position us for over a decade of low risk development investment in growth, once the differential between Appalachia and Henry Hub begin to obey. Finally, we’ve also now proven that we can successfully explore development and produce in the deep water of Gulf of Mexico, having discovered Amethyst and Cardona in 2014, then constructed and brought on line early and under…

[Operator Instructions] Our first question comes from the line of Doug Dyer of Heartland Advisors.

And good morning, gentlemen. Looking out into the rest of the year, what would you anticipate the breakdown in CapEx to be with regard to development, exploratory and infrastructure?

Mostly development and we have only one more exploration well, which is about a $29 million investment and I think our remaining CapEx is about 300 or so candidate.

I think just under 350, so Doug it will mostly go to the Cardona number 6, Amethyst though drilling completion, those so far are the two biggest ones. We’ll also be receiving the Pompano platform rig in the fourth quarter. So a great data is pointed out. A majority of the CapEx is targeted really for development projects. I think exploration dollars is more when you get into 2016, where we have more of exploration line up, but some of that CapEx can be adjusted depending upon what working interest we target in the various projects for 2016.

Alright, thank you very much.

Thank you, Doug.

Our next question comes from the line of Michael Glick from Johnson Rice.

Hey, guys. Just looking towards ‘16 in terms of your exploratory program, do you guys have - I know that’s probably a very small prospect, [ph] do you guys kind of have a targeted working interest that you would like to have?

I think that’s going to vary from project to project Michael. We’re generally in the range of 30% to 50%, particularly with prospects if we can end up get a promote on there, which just to give a little color on that. We have had quite a bit of industry interest in those three prospects I mentioned, Derbio, Apple and Lamprey.

Okay, and then just quickly on Appalachia, I mean it looks like you guys have 25 drilled, but uncompleted wells. Can you walk us through the thought process relative to ultimately completing those wells?

Sure, the only reason we didn’t complete on this is just to conserve capital in this low cost environment and because the differentials between Henry Hub and the M2 market are so high right now. We see a lot of pipes that are proposed and are being constructed up there, so we think the differentials are likely to come down significantly over the next couple of years. And as the differentials start dropping, that will make the projects more attractive than will - depending upon what the price of completion is, we’ll probably start considering completing those wells when the market conditions indicate that we can actually create value by doing so.

And Mike, it’s Ken. Those are - we’ve got 25 wells on three separate pads, so it doesn’t necessarily have to be all or nothing. We may just let complete eight of the one pad and see how prices hold out and then look to move forward or not with the other two pads. So it’s in the inventory as David’s pointing out. The wells have been drilled, but the go forward decision is probably more tied - but it’s really tied on the combination of where do we think the realized price will be for gas and the liquids? And also with the cost of the fracking extras will be and obviously the cost has certainly come down and we’re seeing there is some increase in pricing or be it small up in Appalachia, but we kind of see that as a good inventory on kind of future production.

Okay, then maybe just kind of expand on the cost side. What do you all seen in the Gulf, kind of outside of rig day rates in terms of cost reductions from peak?

Yeah, I think we’re looking at rain and it varies widely by category, but overall it’s probably in the neighborhood of 10% to 20%, Michael.

Okay, got it. Alright, thank you very much.

Thanks, Mike.

[Operator Instructions] And we have no additional audio questions at this time.

Okay. Well, thanks everyone for joining the call. We’d look forward to seeing you in person sometimes then. Thank you, bye.

Bye, bye.

This concludes today’s conference call. You may now disconnect.