Current SN Stock Info

3,000 lbs proppant per foot yielding flatter decline curves

Sanchez Energy (ticker: SN) announced results for first quarter 2017 today, showing a net loss of $12.5 million, or ($0.18) per share. This exceeds the $69.8 million loss the company reported in Q1 2016, but falls short of the $48.3 million in earnings Sanchez received in Q4 2016.

Sanchez closed its Comanche acquisition this quarter, adding 33.5 MBOEPD of net production. This transaction saw Sanchez and Blackstone Energy Partners acquire Anadarko’s Eagle Ford assets for about $2.3 billion. The 318,000 acres acquired were split evenly between Sanchez and Blackstone, along with all other assets.

Completing DUCs, reactivating wells top priority on new acreage

Sanchez’s first priority upon acquiring the Comanche properties was completing the DUC inventory.

At purchase time the acquisition included a total of 132 gross DUC locations. Since then, the company has completed its first nine DUCs. While these wells have a short lateral length, about 4,400 feet, production is exceeding type curves by 20%. In addition, Sanchez brought 13 shut-in wells back online, adding 2.1 MBOEPD of production for a total cost of $1.2 million. At present Sanchez is operating three drilling rigs, four frac spreads and seven workover rigs on its newly acquired acreage, and plans to add two more drilling rigs in Q2.

Sanchez Increases Completion Intensity 60% in Shorter Eagle Ford Wells

Source: Sanchez Energy

1000 feet shorter laterals (with 60% more sand) = better results

In its Catarina Eagle Ford acreage, which Sanchez owned before the Comanche acquisition, the company has found success with intense completions. Fourteen wells were brought online in the area this quarter using a new completion design that features 3,000 lbs of proppant per foot, 60% more than the company’s standard design. The wells produced in line with the area type curve, averaging a 30 day IP of 1,050 BOEPD despite being 1,000 feet shorter than the standard lateral length.

According to Sanchez, these wells should result in a flatter decline profile, making wells with this completion design about 25% better than standard wells after six months of operation. Additional appraisal wells are planned to prove locations for future drilling. The total cost of these more intense wells is $3.9 million, up from the $3.2 million the company spent on the average well in Q4 2016. This increase is primarily due to the increase in proppant loading, and is in-line with company expectations.

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