Stone Energy Corp. (NYSE: SGY) said June 29 it has executed a new interim Appalachian midstream contract, allowing the company to resume production in the Marcellus Shale.

The Lafayette, La.-based company entered into a gas gathering and processing agreement with Williams Cos. Inc. (NYSE: WMB) at the Mary Field in Appalachia. The field, located in West Virginia, targets the Marcellus Shale play.

Volumes from the Mary Field are now at about 45 million cubic feet equivalent per day (MMcfe/d). Production is expected to climb to more than 60 MMcfe/d in July and then more than 100 MMcfe/d by August.

The volumes are in addition to the about 20 MMcfe/d producing from the Heather and Buddy fields in the region.

The effects of the agreement on annual guidance, including production volumes and associated costs, are still being assessed and will be provided in the company's second-quarter release.

Stone also said it has agreed to terminate its long-term deepwater rig commitment with Ensco Plc (NYSE: ESV) in the Gulf of Mexico. The termination provides the company with additional financial flexibility, said David Welch, chairman, president and CEO of Stone Energy.