Sanchez Energy Corp. (ticker: SN) is an oil and natural gas exploration and production company focused on its 92,000 net acre position targeting the Eagle Ford Shale in South Texas. SN is exploring and developing three areas of the Eagle Ford trend – Palmetto (50% WI), Maverick (80% to 100% WI) and Marquis (100% WI) – located across Gonzales, Zavala, Frio, Fayette, Lavaca, Atascosa, Webb, and DeWitt Counties, Texas.
A recent operations update highlighted the following:
- Current net production rate of 4,400 BOEPD. OAG360 notes that back in Q1’12, SN guided investors to a 2012 exit rate of 4,000 BOEPD. Kudos to management for over-delivering on reported production guidance. Let’s not forget SN has three additional wells currently being completed and an additional five wells that will spud between mid-December to year-end 2012.
- SN is drilling the first of its five-well, 40-acre spacing pilot program on the Barnhart Ranch.
- SN is running two rigs in Palmetto, one rig in Maverick and two rigs in Marquis.
SN continues to transition to more of a development-type operator in the Eagle Ford which hopefully leads to continued growth in Eagle Ford production and reserves. We’ve seen that the company is able to increase production: current production is up 159% from Q3’12 exit rate. We’ll wait and see what the reserves look like for 2012 year-end.
Complementing this transition to development mode is the fact that wells keep getting bigger and better. Management teams in the Eagle Ford, specifically SN, attribute 3D seismic as the difference maker. In SN’s Palmetto area, the company had previously been drilling wells with 14 to 18 stages. Now, due to the 3D seismic data, operators are able to position wells more accurately in order to drill longer laterals and increase frac stages to more than 20. Management believes they have ample running room with their current acreage footprint. Longer term however, keep in mind, SN owns rights to all depths and zones for the majority of its acreage. This includes the Buda Lime, Austin Chalk, and Pearsall formations.
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