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Current SN Stock Info

Sanchez Energy Corporation (ticker: SN) is a Houston, Texas, based growth oriented independent exploration and production company focused on the exploration, acquisition, and development of oil resources in the onshore U.S. Gulf Coast with a current focus on the liquids-rich Eagle Ford Shale, Austin Chalk, Buda Limestone, and Pearsall Shale.

Sanchez Energy Corporation released second quarter production results July 24, revealing Q2’13 production of 682 MBOE – an increase of 92% over Q1’13 and an increase of 772% over the same time last year. SN results showed a proved reserve growth of 103% since year-end 2012 to 43 MMBOE.  Of their production, 77% was oil, 12% natural gas liquids and 11% natural gas. Sanchez has seen seven consecutive quarters of increasing production rates. SN estimates a 2013 production exit rate range of 15,000 to 17,000 BOEPD, an increase of over 255%, at the midpoint of the range, over their 2012 exit rate of approximately 4,500 BOEPD. The company also estimates a 2014 production exit range of 20,000 to 22,000 BOEPD.

073113SN_Pic1Additional Bolt On Acquisitions

Sanchez announced it entered into an agreement that is expected to close by the end of July to acquire 10,800 net acres in Fayette, Gonzales and Lavaca Counties in the Marquis area for $29 million. The acreage has an estimated net production of 250 BOEPD.  Sanchez holds 140,000 net acres targeting the Eagle Ford formation.

Company Quote

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, said in the news release: “Our production and reserve growth continues to be strong, with both nearly doubling in the first half of the year. We successfully closed and have transitioned the Cotulla assets to our control as of June 1, 2013.  The acquisition also includes interests in seven wells with modest proved reserves and production, and we anticipate this acquisition to have multiple developmental synergies with our current Marquis program.”

Well Status

The company has 25 wells in various stages of drilling, completion and initial flow back, with seven rigs running (six net). Five of these are operated and two are non-operated. A third rig is expected to be added by October in their Palmetto project area. Sanchez attributes the inventory of wells to multi-well pad drilling to drive capital costs down and increase drilling operational efficiency. To reduce operating costs, SN decided to accelerate the replacement of temporary flow-back facilities in 16 of the acquired wells. According to the company’s June corporate presentation, the Eagle Ford has an average 52% rate or return, coming in second only to the Marcellus Shale at 53%.

However because of this decision a number of wells faced shut-ins resulting in a deferment of approximately 25,000 BOE of June production to future periods.

073113SN_pic2

One out of three wells in the Marquis area, Prost C #7H, is being sidetracked due to a contractor error in cementing of the production casing. The well was scheduled to be producing for 60 days of Q2’13 with 29,000 BOE of production, but is now expected to come online in the second half of the year.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.