Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy” or the
“Company”), today announced the closing of the previously announced
acquisition of working interests in approximately 318,000 gross
operated acres in the Western Eagle Ford from Anadarko Petroleum
Corporation (NYSE:APC) (“Anadarko”) through a 50/50 partnership
involving wholly-owned subsidiaries of the Company and with
Blackstone Energy Partners (“Blackstone”) (the “Comanche
Transaction”). After purchase price adjustments associated
with net cash flows from July 1, 2016 (the effective date of the
transaction), which totaled approximately $200 million, the 50/50
partnership paid approximately $2.1 billion ($1.05 billion net to
Sanchez Energy) to close the transaction, which includes proved
reserves of approximately 300 million barrels of oil equivalent
(“MMBoe”) (approximately 150 MMBoe net to Sanchez Energy).
Commenting on the Comanche Transaction, Tony
Sanchez, III, Chief Executive Officer of Sanchez Energy said, “With
the closing of the Comanche Transaction, the Company’s operated
Eagle Ford position is now approximately 585,000 gross acres
(335,000 net to Sanchez Energy). The contiguous nature of the
acquired acreage relative to our Catarina asset creates an
opportunity for significant operational and cost synergies.
Our initial focus for the asset will be on completing the 132 gross
drilled but uncompleted (“DUC”) wells on the acreage, which we
believe will allow for immediate and rapid production growth over
the next 12 months. The closing of this transaction increases
our total net proved reserves to approximately 340 MMBoe, which
represents an increase of approximately 78 percent from our
year-end 2016 reserves. With the current development plan, we
expect full year 2018 net production to be in excess of 100,000 Boe
per day, double our average production rate for 2016.
Importantly, we view this transaction as a key step toward
deleveraging the Company’s balance sheet and anticipate that this
strong production growth and reduced leverage will enable us to
deliver significant value to our shareholders in the coming
years.”
NON-RECOURSE FINANCING AND LIQUIDITY
UPDATEIn conjunction with closing the Comanche
Transaction, the Company closed the previously announced financing
at its newly formed, unrestricted subsidiary SN EF UnSub, LP
(“UnSub”), which included $500 million in proceeds from the
issuance of non-convertible perpetual preferred equity to funds
managed by GSO Capital Partners LP (“GSO”) and borrowings under a
new revolving credit facility (non-recourse to Sanchez Energy) (the
“UnSub Credit Facility”) totaling approximately $173.5
million. The UnSub Credit Facility, which was led by JPMorgan
Chase Bank, N.A. as administrative agent and Citigroup Global
Markets Inc., involves a syndicate of 16 lenders, including nine
financial institutions that are not in the existing Sanchez Energy
credit facility. The UnSub Credit Facility is secured by the
assets of UnSub and has an initial borrowing base of $330 million,
which is subject to semi-annual redetermination.
Upon closing the Comanche Transaction, the
Company maintained total liquidity of approximately $602 million,
which includes borrowing capacity of $457 million under its credit
facilities and approximately $145 million in cash and cash
equivalents.
COMANCHE HEDGING
UPDATEConsistent with its strategy of hedging a high
percentage of anticipated production, the Company has hedged
approximately 80% of the oil and natural gas volumes from the
proved developed producing reserves of the acquired Comanche assets
with swaps at prices of $55.85 per Bbl and $3.26 per MMBtu from
April 2017 through September 2018, and $53.52 per Bbl and $2.82 per
MMBtu from October 2018 through March 2020.
ABOUT SANCHEZ ENERGY
CORPORATIONSanchez Energy Corporation (NYSE:SN) is an
independent exploration and production company focused on the
acquisition and development of U.S. onshore unconventional oil and
natural gas resources, with a current focus on the Eagle Ford Shale
in South Texas where we have assembled over 335,000 net acres. For
more information about Sanchez Energy Corporation, please visit our
website: www.sanchezenergycorp.com.
FORWARD LOOKING STATEMENTSThis
press release contains, and our officers and representatives may
from time to time make, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that Sanchez Energy expects, believes or anticipates
will or may occur in the future are forward-looking statements,
including statements relating to the expected financial and
operational results of the Comanche assets and the expected
synergies and benefits related to the Comanche Transaction. These
statements are based on certain assumptions made by the Company
based on management's experience, perception of historical trends
and technical analyses, current conditions, anticipated future
developments and other factors believed to be appropriate and
reasonable by management. When used in this press release,
the words "will," "potential," "believe," "estimate," "intend,"
"expect," "may," "should," "anticipate," "could," "plan,"
"predict," "project," "profile," "model," "strategy," "future," or
their negatives, other similar expressions or the statements that
include those words, are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words.
Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of Sanchez Energy, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements, including, but not limited to the failure of the
acquired assets and partnerships to perform as anticipated, failure
or delays on the part of our partners, failure to continue to
produce oil and gas at historical rates, costs of operations,
delays, and any other difficulties related to producing oil or gas
or completing our ongoing joint venture projects, the price of oil
or gas, marketing and sales of produced oil and gas, estimates made
in evaluating reserves and future production, competition, general
economic conditions and the ability to manage our growth, our
expectations regarding our future liquidity and leverage, our
expectations regarding the results of our efforts to improve the
efficiency of our operations to reduce our costs and other factors
described in Sanchez Energy's most recent Annual Report on Form
10-K and any updates to those risk factors set forth in Sanchez
Energy's Quarterly Reports on Form 10-Q or Current Reports on Form
8-K. Further information on such assumptions, risks and
uncertainties is available in Sanchez Energy's filings with the
U.S. Securities and Exchange Commission (the "SEC"). Sanchez
Energy's filings with the SEC are available on our website at
www.sanchezenergycorp.com and on the SEC's website at www.sec.gov.
In light of these risks, uncertainties and assumptions, the events
anticipated by Sanchez Energy's forward-looking statements may not
occur, and, if any of such events do occur, Sanchez Energy may not
have correctly anticipated the timing of their occurrence or the
extent of their impact on its actual results. Accordingly, you
should not place any undue reliance on any of Sanchez Energy's
forward-looking statements. Any forward-looking statement
speaks only as of the date on which such statement is made and
Sanchez Energy undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
COMPANY CONTACT:
Kevin Smith
VP Investor Relations
(281) 925-4828
Cham King
Investor Relations & Capital Markets
(713) 756-2797
General Inquiries: (713) 783-8000
www.sanchezenergycorp.com
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