Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy” or the
“Company”), today announced operating results for the first quarter
of 2017. Highlights include:
- As previously announced, Sanchez Energy along with Blackstone
Energy Partners (“Blackstone”) in a 50/50 partnership closed the
acquisition of working interests in approximately 318,000 gross
operated acres in the Western Eagle Ford on March 1, 2017 (the
“Comanche Transaction”), resulting in adding approximately 67,000
barrels of oil equivalent per day (“Boe/d”) of production, 300
million barrels of oil equivalent (“MMBoe”) of proved reserves, and
155,000 net acres;
- First quarter production, which includes one month of Comanche
production, totaled approximately 4.6 MMBoe, or approximately
51,800 Boe/d, net of previously divested production which was
approximately 3,700 Boe/d;
- With the closing of the Comanche Transaction and the ongoing
production increase from legacy assets, the Company is currently
producing at a record level of approximately 76,000 Boe/d;
- Completion operations on the large inventory of drilled but
uncompleted (“DUC”) wells acquired in the Comanche Transaction
began in early March 2017, with the first 9 DUC wells brought
on-line in mid-April 2017;
- The Company has completed contracting of major services to
support drilling plans and mitigate the risk of inflationary
pressure on its cost structure, with sand, pressure pumping, and
drilling rigs now contracted for the next two years;
- Drilling activity at Comanche currently consists of 3 rigs with
2 additional rigs planned in May 2017;
- The Company brought 14 wells on-line in the South Central
region of Catarina in the first quarter 2017 using a new generation
of frac design that is 60% larger than the previous design used in
this region.
MANAGEMENT COMMENTS
“During the first quarter of 2017, we took a major
step towards positioning Sanchez Energy among the leading producers
in the Eagle Ford Shale,” said Tony Sanchez, III, Chief Executive
Officer of Sanchez Energy. “After months of careful planning
and preparation, drilling and completion operations on the newly
acquired acreage began quickly and efficiently after closing the
Comanche Transaction on March 1, 2017. Completion operations
began at Comanche within days of closing the transaction, resulting
in initial production from the completion of the first 9 DUC wells
in only 45 days. We are currently running 3 drilling rigs, 2
frac spreads, and 3 workover rigs at Comanche, with plans to add
additional rigs and completion equipment as the year progresses.
Production from the initial DUC wells that were recently completed
has been strong and so far has exceed expectations.
“In addition to assuming operations at Comanche,
the Company brought 14 horizontal wells on-line in the South
Central region of Catarina during the first quarter 2017.
These wells were completed with proppant loading of approximately
3,000 pounds per foot, which is 60 percent more proppant and fluids
compared to our standard design. The move to a larger
completion design in the South Central region of Catarina stems
from tests conducted in this area over the last year. Based
on the results of this testing, we anticipate the new design will
result in a flatter decline profile with payout in as little as six
months and performance that is roughly 25% better than our standard
completion work after 6 months of operation.
“As we make a step-change in our operational scale,
we continue to maintain a focus on well costs. Excluding the
cost of the larger completion work we are realizing an average of
10 percent to 15 percent service cost inflation, which is in line
with expectations. That being said, we have now completed
contracting of major services to support drilling plans for the
next two years, with fixed price arrangements in place for sand,
pressure pumping, and drilling rigs, among other services. We
believe these arrangements will allow us to maintain our cost
structure and de-bundled approach to procurement despite the
current pressure on the services market.”
HEDGING UPDATE
As previously announced, the Company has hedged
approximately 80 percent 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 barrel (“Bbl”) and $3.26 per
million British thermal units (“MMBtu”) from April
2017 through September 2018, and $53.52 per Bbl
and $2.82 per MMBtu from October
2018 through March 2020. Additionally, the Company
has hedged 7,000 Bbls per day of its 2017 oil production and
approximately 100 MMBtus per day of its 2017 natural gas production
from legacy assets. Additional information on the Company’s
hedge positions can be found in the Sanchez Energy Investor
Presentation posted at www.sanchezenergycorp.com.
OPERATIONS UPDATE
During the first quarter 2017, the Company spud 33
gross (28.8 net) wells and completed 19 gross (16 net) wells.
Total well costs at Catarina during the first
quarter 2017 averaged approximately $3.9 million per well as the
Company tested significantly enhanced completion designs.
South Central Catarina wells were completed with approximately
3,000 pounds per foot of proppant, which is an increase of
approximately 60 percent when compared to well designs used in
2016. At Maverick, the Company is in the process of drilling
27 wells on the Hausser lease and completion activity on these
wells is expected to begin early in the third quarter of
2017.
During the first quarter of 2017, the Company
brought 14 wells on-line at Catarina. As of March 31, 2017,
the Company had completed 69 wells towards its 50 well annual
drilling commitment at Catarina, which runs from July 1, 2016 to
June 30, 2017. Accordingly, the Company has already banked 19
wells towards next year’s annual drilling commitment and is on pace
to reach 30 wells banked by June 30, 2017.
As of March 31, 2017, the Company had 2,060 gross
(821 net) producing wells with 169 gross wells in various stages of
completion, as detailed in the following table:
Project Area |
|
Gross Producing Wells |
|
Gross Wells Waiting/ Undergoing Completion |
Catarina |
|
347 |
|
19 |
Comanche |
|
1,435 |
|
133 |
Maverick |
|
80 |
|
12 |
Marquis |
|
104 |
|
0 |
Palmetto |
|
80 |
|
5 |
TMS / Other |
|
14 |
|
-- |
Total |
|
2,060 |
|
169 |
|
|
|
|
|
PRODUCTION UPDATE
The Company’s estimated total production for the
first quarter 2017 averaged approximately 51,800 Boe/d. This
rate of production is in-line with expectations, and the Company
believes it remains on pace to hit its full year 2017 production
guidance of 78,000 to 82,000 Boe/d. The Company’s production
mix during the first quarter of 2017 consisted of approximately 33%
oil, 29% natural gas liquids, and 38% natural gas.
ABOUT SANCHEZ ENERGY
CORPORATION
Sanchez 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 STATEMENTS
This 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 future
operating results and returns, our strategy and plans, including
future drilling plans, our ability to increase reserves and
production and generate income or cash flows, our ability to keep
well costs down, the benefits of our partnership with Blackstone
and 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 failure to successfully
execute our business and financial strategies, failure to achieve
the expected benefits of our partnership with Blackstone, inability
to successfully close announced transactions,, failure to realize
the benefits of our acquisitions, including the Comanche
Transaction, failure to economically develop our acreage and to
produce reserves and achieve anticipate production levels, the
price of oil or gas, marketing and sales of produced oil and gas,
estimates made in evaluating reserves, competition, general
economic conditions and the ability to manage our growth, our
expectations regarding our future liquidity, 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. 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