When I looked at Stone Energy (NYSE:SGY) shares back in March, they had been beaten down pretty far. Production had been cut because of hurricanes, reserves were revised downward, the filing of third-quarter results was delayed, financials back to 2001 had been restated, and the SEC launched an inquiry. At the time, I took a pass on the shares, hoping to check back with the company in a few quarters.

Most of the time, the market doesn't give you a chance to wait. Bad news beats shares down. Beaten down company is acquired. It happens all the time. It will happen to Stone Energy.

The purchase
Stone Energy has received an unsolicited bid of $52 per share from Energy Partners (NYSE:EPL). This represents a 25% premium over the price of Stone Energy shares before the bid was announced. How does this bid stack up to recent acquisitions in the Gulf of Mexico?

Buying Company

Purchased Company

Price: $/BOE*

Norsk Hydro (NYSE:NHY)

Spinnaker Exploration

$42

Helix Energy (NASDAQ:HELX)

Remington Oil & Gas

$30

Energy Partners

Stone Energy

$20
*BOE (Barrel of oil equivalent)

It appears that Energy Partners is paying a discounted price, but there's a big difference between Stone and the other two companies. Stone Energy focuses on shallow water Gulf of Mexico, and the other two were deepwater companies. Deepwater companies command a premium because there are huge reserves -- estimated by the Minerals Management Service to be 71 billion BOE -- in the deepwater Gulf of Mexico. The shallow water continues to be a major producing region, but expectations of finding a giant field are limited.

Also, as I pointed out in March, Stone Energy is just recovering from an entire year of difficulties. Spinnaker and Remington were both on the top of their game when they were acquired. Combine the two factors, and the premium for Spinnaker and Remington makes sense. Beyond that, this is only one metric, which doesn't account for production rates, unproven but estimated reserves, or unexplored acreage.

The wild card
This deal between Energy Partners and Stone Energy might not go through. In April, Stone Energy agreed to be acquired by Plains Exploration (NYSE:PXP). However, the offer from Energy Partners is 26% higher than the stock transaction offered by Plains Exploration, so I believe they're in the driver's seat. Call me a cynic, but unless Plains Exploration (or someone else) makes a counteroffer, I'd bet Stone Energy shareholders will take the higher price.

Conclusions
The bidding for Stone Energy shows that mergers and acquisitions continue in the oil patch. Smaller production companies with prime properties are being snatched up by bigger fish looking to build their reserves and production. Furthermore, both Plains Exploration and Energy Partners looking at Stone Energy shows that a company with problems can deliver gains, if you buy it at the right price.

I'm not sure which other companies are discounted with problems like Stone Energy had. However, if I had to guess who the next target would be, I'd pick a deepwater Gulf of Mexico producer. Two smaller companies probing the depths are Bois d'Arc Energy (NYSE:BDE) and newly public Mariner Energy (NYSE:ME).

For related Foolishness:

Looking for beaten-down stocks that could become buyout candidates? In February, Bill Mann recommended TransMontaigne to subscribers of Motley Fool's Hidden Gems . Like Stone Energy, the terminal operator was down and out. A few short weeks after the recommendation, TransMontaigne received a purchase offer, delivering a 42% gain to subscribers who bought at the original recommendation price.

Fool contributor Robert Aronen does not own shares of any company mentioned. He's hoping for an unsolicited bid for his company and its vast unproven reserve portfolio.