Good morning. My name is Debbie and I will be your conference operator today. At this time, I would like to welcome everyone to the Stone Energy Second Quarter 2013 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. Mr. Welch, you may now begin your call.

Okay. Thank you, Debbie. This is Dave Welch, Chairman and CEO and with me this morning is Ken Beer, our Executive Vice President, Chief Financial Officer. Ken is going to discuss our quarterly financial results and then I’ll provide an update on our progress in implementing our strategic plan. We’ll then follow this with your questions. Ken?

Thank you, Dave. Let me start with forward-looking statements. 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 of the risks and uncertainties normally incident to the exploration for and the development, production and sales of oil and gas. We urge you to read our 2012 annual report on Form 10-K and the recent 10-Q that should be filed tomorrow for discussion of the risks that could cause our actual results to differ materially from those that any 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, which is posted on our website for a reconciliation of the differences between these measures and the most directly comparable GAAP financial measures. Let me go on rather than go through the second quarter results in great detail, we will assume that people have seen the press release and attached financials. Accordingly, I will focus on the selective financial items on the call. First our discretionary cash flow for the quarter was $170 million or $3.40 per share and the earnings for the quarter were $39 million or $0.78 per share with both of these results significantly higher than the analyst first call estimates either production for the quarter came in at over 45,000 Boe per days or over 270 million cubic feet equivalents per day are well above the upper end of our guidance which was 250 million cubic feet a day above. Our Marcellus volumes were strong contributor as our production fall on the Williams pipeline…

Okay. Thank you, Ken. All of our businesses performed very well this quarter and we achieved many important strategic milestones for the future. We delivered production well above our second quarter guidance and are increasing the upper end of guidance for the full year. Also our reserves were stable and are expected to grow again this year. Once again we generated significant discretionary cash flow of almost $170 million which substantially funded our $190 million of capital needs in the second quarter. The balance sheet remains strong as we ended the quarter with over $226 million in cash and our bank revolver remains undrawn at $400 million. We had no long-term debt obligations due until 2017. We continue to exploit our legacy conventional shelf assets as we develop our three growth areas, Appalachia, deep water and the liquids rich deep Gulf Coast. Our strategy remains the same as the last seven years to pursue investment and price advantage natural gas and material oil projects. Our proved reserves are still almost balanced with approximately 49% liquids and 51% natural gas as of December 31, 2012. The positioning and continued performance sets us up well for the execution of our three year plan. The three year plan includes an aggressive workover program with limited drilling investment in the conventional shelf, development drilling in the liquids rich onshore Gulf Coast business, continuation of our one top-hole rig, one horizontal rig program in Appalachia and now accelerating investments in the deep water Gulf of Mexico. That now also includes the market test of our non-core shelf properties for potential divestment this year. On the shelf, we plan to drill about five wells this year with the aim of maintaining a relatively stable liquids production rate but not trying to grow reserves there due to…

(Operator Instructions) Your first question comes from Dave Kistler from Simmons & Company. David W. Kistler – Simmons & Company International: Good morning, guys; great work.

Hi, Dave.

Good morning, Dave. David W. Kistler – Simmons & Company International: Real quickly on the asset disposal or potential asset disposal, can you breakdown for maybe a production standpoint and use of capital, what would be constituted non-core versus core and maybe the impact that divestiture there would have on the borrowing base?

I’ll take the first part, maybe Ken can do the second. Basically we were looking at doing Dave is just keeping our two or three largest oil fields and pretty much everything else would be considered non-core.

Yeah, and to that really the thought is our focus has clearly been on these deep water projects and deep gas projects. We’ve got – they put couple of shelf deals that we have committed capital and importantly human capital to put the remaining assets in our shelf portfolio, really just haven’t spent the time certainly for someone else who can come in and spend the time in resources, it’s just going to make some sense. I think we’ve suggested it that the volumes if you look at the first or second quarters, somewhere around 20% of our volumes, most of that would be gas. One of the things it gives us some comfort is the inclining production that we’re seeing out of the Marcellus certainly can help fill any sort of void on the production side. And the thought, quite honestly was this was a property package that someone else might have a lot of activity and make it work for them and it can be a good win-win for both groups. So that was the thought having said that as Dave pointed out it is a market test we really don’t have to do anything, because financially we’re exiting the year, we got a strong balance sheet in terms of our cash undrawn facility. But we’re just looking to focus and refocus on really our growth areas and turn this baton over to somebody else.

Yeah, another way to think of it too, is that the opportunity set that’s embedded in these non-core properties has not been able to attract our capital given the opportunities that we see in Deep Water and thus these properties are more or likely worth more to someone else than they are to us and we expect to capture part of that value. David W. Kistler – Simmons & Company International: Okay, makes sense I appreciate that. And then in the same sort of divestiture comment that really more selling down working interest, can you guys give us an update on the Amethyst prospect and the potential sell down there and ultimately is that something you consider just drilling 100% from Stone Capital?

I would say that we would consider drilling at a 100% from Stone Capital although we are still active in the market to get a partner and we are trying to find a promoted partner on Amethyst and so that work continues and I’m pretty optimistic that we will find someone Dave. David W. Kistler – Simmons & Company International: Okay. I appreciate that. And one last one just hopping over to CapEx for a second, Ken you had mentioned looking at the 2Q run rate that could be biased higher can you kind of give us more definition around when you say biased higher are we talking 10% higher, 5% how should we be kind of thinking through that?

Yeah. Still a moving target again tied to a number of different variables including the working interest at Amethyst, as well as the timing of some of the other projects that we’re involved in whether it would be Taggart, San Marcos. And again, we just want to alert you that our run rate is may push that number a little bit, we do have some levers that can help address that. We obviously have the cash on hands, so it’s not a issue of us being scrapped from a cash standpoint. Again, this is more just moving the flag making sure people recognize a run rate, we just need to pay close attention to it. David W. Kistler – Simmons & Company International: Okay. I appreciate that definition. Thanks.

It doesn’t sound like he’s going to give you a number, Dave.

Your next question comes from Michael Glick with Johnson Rice. Michael Glick – Johnson Rice & Co.: Good morning guys.

Hey Mike. Michael Glick – Johnson Rice & Co.: Just a good question on the CapEx front in terms of deep water infrastructure how much that spend is allocated into 2013 ahead of Cardona?

Do you know the exact number there?

You’re talking about I mean ultimately we will spend well North of 50, approaching $75 million before we even spud the first Cardona well. So we are doing some pre-spending I mean this is – in order to accelerate production after drill and again a pretty aggressive time table we’ll spud in and having projecting to have Cardona on production within a year part of recent provide for that to happen is we are spending the dollars on the front end. And so that’s again it’s going to be in that $50 million, $75 million range. Michael Glick – Johnson Rice & Co.: Okay. And then just in terms of the infrastructure itself, I mean is it designed for Cardona specifically or is it flexible enough to be able to cater to future wells in the area?

The subsea infrastructure is being built very flexibly, what we’re building is actually a flow line loop that would accommodate the two Cardona wells and two additional hubs. So you could tie back additional wells into this system and get them back on to the Cardona platform. So if lightning struck and something happened on the Cardona wells we have in the area something we have over a dozen development wells and over a dozen exploration prospects in the area. So we don’t feel like as much risk, financial risk in terms of putting the infrastructure in ahead off or simultaneously with the drilling of the two Cardona wells.

Yeah, Mike to Dave’s point again we are spending incremental capital to provide for that flexibility, we think it’s an exceptionally good investment because instead of having just one single dumb flow line back from the first Cardona well, we now have a system that provide to the flexibility of other wells or quite honestly other systems coming into this, this loop system. So yes more dollars in the front-end but probably we could hope a very good business decision.

Yeah. And just marginally incremental dollars on the front-end to provide that flexibility it’s not the whole Cardona developments, couple of hundred, $250 million or so and you’re talking about less than $10 million incremental to be able to provide this flexibility. Michael Glick – Johnson Rice & Co.: Gotcha. And then just given that opportunity you said in the area, I mean should we look ultimately at some of the non-op exploration prospects is being potential source of proceeds in the event of success to fund the operator (inaudible) area?

Sure. We are ready have PHA agreements with about $5 million or $10 million a year of production handling fees but our number one objective of course is to low that up with equity barrels. To the extent that there is extra oil that’s there we can certainly do one of two things, we can charge a fee to process other people’s oil for them which we’re doing somehow or we can leverage our infrastructure into an equity position and additional non-operated prospects, so it’s a very strategic piece of two pieces of infrastructure to have out there. And we’re really thankful we have. Michael Glick – Johnson Rice & Co.: Okay, great, thank you.

You bet.

Your next question comes from Tom Nowak with Advent Capital. Tom Nowak – Advent Capital: Hey, good morning.

Good morning. Tom Nowak – Advent Capital: If you are able to get the sale of the shelf assets off your gross leverage debt-to-EBITDA would probably pick up fairly meaningfully. Should we expect a permanent reduction in your growth debt levels, would you be using the proceeds to call the eight and five eights of 17?

Really have not made any sort of public disclosure on the true use of proceeds at this point of time again the timing of this process would be some time probably would lap into early next year might be late this year or early next year. But in terms of use of proceeds really have not addressed that Tom. Tom Nowak – Advent Capital: Is keeping your gross leverage level about where it is or flat or above or below?

And as I’d say right now kind of our debt position right now we really are very comfortable with you should looking at any sort of coverage ratios or metrics and we’re in very good shape and so we’re not looking to get our debt down substantially versus just have it, be it in this comfort level. Tom Nowak – Advent Capital: And expected impact on the borrowing base?

Not a whole lot, we really did not push our borrowing base might notice as our borrowing base will actually cap at the $400 million, we certainly had the flexibility to take that number off in fact substantially and so to answer your question we really would not see a whole lot if quite – we wouldn’t really expect to see any change in the borrowing base. Tom Nowak – Advent Capital: Okay sure. Thanks a lot.

Hey thanks Tom.

Your next question comes from Richard Tullis with Capital One Southcoast. Richard Tullis – Capital One Southcoast: Thank you, good morning.

Good morning. Richard Tullis – Capital One Southcoast: Okay if just going back to your comment on the ultra deep well, sorry if I missed it, what were the plans there?

Well this is the Pumpkin Ridge, you are probably alluding to. Richard Tullis – Capital One Southcoast: Yes.

That’s a large geologic structure that we’ve acquired the acreage on, we are going to be doing some shooting some additional 3D data, interpreting that data and really trying to determine if it has potential for both (inaudible) as well as the Wilcox. And then if it does, then we’ll appropriately try to market at particularly promoted interest in this. So we can end up testing a potentially large reserve accumulation on a leverage basis. It’s very early days on that, but we just thought it was important for you to know that we have acquired that acreage position. Richard Tullis – Capital One Southcoast: And it’s would be on land, drilling off land?

It is on land. Yes, it’s on land. So would be substantially less expensive than these big deep ore or deep gas wells that you hear about that are offshore, is that right. Richard Tullis – Capital One Southcoast: Excuse me go ahead.

No, no go ahead. Richard Tullis – Capital One Southcoast: What would be the maximum working interest you’d be comfortable with that sort of well?

It depend on the market reaction, the promote that we’re able to get, we haven’t done a risk assessment on the well yet. So it’s very early for us to be able to speculate on that at this point of time. Richard Tullis – Capital One Southcoast: Okay.

We’ll keep you posted as we work through it. Richard Tullis – Capital One Southcoast: Okay. There has been some recent I guess positive news with the subsalt play in the shallow waters and then some additional interest by other parties and pursuant to play, how does Stone look at that subsalt play, the 15,000 foot to 20,000 foot level in the shelf?

We have a number of what I would call offshore deeper prospects in our inventory. The ones that we’re maturing right now are what I would say the easier ones which are onshore and one of the offshore ones, which is Tomcat is actually about 20,000 feet, but it’s not a subsalt. So that’s a little bit further out on our portfolio priority. Richard Tullis – Capital One Southcoast: Okay.

Some of that are immediate. Richard Tullis – Capital One Southcoast: And then if you do go forward with the Gulf of Mexico shelf sale, would you look to retain deeper rights across a lot of your acreage?

We’d certainly want to negotiate some interest in those deeper rights. Richard Tullis – Capital One Southcoast: Okay, okay. And then Dave you also mentioned that the Company could double deep water production from the current 10,000 barrel a day level, would combination of wells do you need for to come through for that to happen?

That’s really just on the heels of the Cardona development and some of our platform drilling and in fact I think the platform drilling should sustain growth even beyond that doubling as we move forward towards the end of our three year plan. Richard Tullis – Capital One Southcoast: Okay, good. That’s all I have. Thanks a bunch.

Okay, thank you.

Thank you, Richard.

(Operator Instructions) Your next question comes from Doug Dyer with Heartland Funds. Doug Dyer – Heartland Funds: Good morning, gentlemen.

Good morning. Doug Dyer – Heartland Funds: Looking into next year, it seems like we’re going to have a pretty big increase in CapEx and although I realize that you haven’t set any numbers for next year. Do you have a rough cut as to what CapEx for next year would be and how far would these shelf sale carry you into next year before we might be into a cash flow negative situation again?

Yeah, it’s Ken. And fair question, that’s one of the things we are looking at. We want to be in a position where we always have some options, obviously coming into the back half of this year with a lot of cash and undrawn facility on the potential sale of the shelf would certainly push us well into 2014, we still look to have that flexibility on our line. So that the thought is that this we certainly can and are still looking at our capital program for 2014 and haven’t made that public in really going before our Board. But the thought is to your point is it should be a pretty active CapEx program, unless make sure we have the funds in capital to execute and that’s where I think between the cash that the potential sale of the shelf and certainly that this fully unused revolver gives us plenty of flexibility. There are other things we can look at in terms of possibly raising some dollars, selling down interest, if we have a discovery we can sell down the interest or sell out of the interest. We’re looking at a number of our prospects bringing joint venture promoted partner. So those are some of the levers that we have that we’re working with that we have to work with. And we’ll just be able to evaluate as we move forward to the back half of this year and into next. Doug Dyer – Heartland Funds: All right. Thank you very much.

Thank you very much.

Your next question comes from Curtis Trimble with Global Hunter. Curtis Trimble – Global Hunter Securities: Thank you. Good morning everyone. I was hoping if you could walk me through kind of the rig situation obviously you got things signed up parameters Cardona would be other – it looks like maybe as nine other deep water wells that you had to operate the non-op. Can you walk me through the rig situation on those issues looking to 2014, which have rigs, already assigned which need rigs?

Sure. The wells that we’re planning on drilling the Cardona and Amethyst those are all rig up as you’re aware. The non-operators have rigs for all of those non-operated projects. The only one that’s in that list I think is Derbio, which is an exploration well that’s somewhat although not completely contingent on Amethyst that well is slated for the back half of 2014 or maybe even in 2015 and that’s the one well that we do not have a rig for yet, so that’s the rig situation. Curtis Trimble – Global Hunter Securities: Again I appreciate it.

Again on the non-op for instance, Exxon has identified a rig from Mica Deep, ENI has appears to have a rig identify for an easy and/or Goodfellow, Apache has the rig coming for San Marcos and LLOG has a rig literally coming this month for Tegron. So at least for the next let’s call at 18 months, we think we’ve got the rig issue, we know which rig and roughly where. Curtis Trimble – Global Hunter Securities: Gotcha. And then in terms of the Conoco JV in 21 potentially in slotted into next year or not, I guess that you should have to be determined?

Well, Conoco is actually build in a rig and this could be I think may be the second well they would drill with that rig. So I think we’re all keen to push 21 forward. We’re going to meeting with Conoco later this month to try to come to a common understanding and common plan on how to go forward there. It’s a little bit complicated because you do have Chevron in the mix and depending upon whether we do. They put all those blocks together with Chevron and try to develop that together or whether we go competitive with Chevron and that will determine outcome of when the well and where the well might be drilled. Curtis Trimble – Global Hunter Securities: I appreciated it.

You bet. But the rig story is to have a rig.

(Operator Instructions) Mr. Welch, there are no further question. Do you have any closing comments?

Okay. Thank you, Debbie and thanks everyone for joining our call. We’ll be with you again at the next quarter so long.

Bye-bye.

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