HOUSTON, March 31, 2015 /PRNewswire/ -- Sanchez Energy
Corporation (NYSE: SN or the "Company") today announced that it has
executed and closed an agreement with Sanchez Production Partners
LP (NYSE MKT: SPP) to sell wellbore and certain associated
interests in certain producing oil and gas wells to a subsidiary of
the SPP for aggregate consideration of approximately $85.0 million to the Company, subject to normal
and customary closing and post-closing adjustments. In
connection with the transaction, SN novated certain gas and oil
hedging transactions related to the production of wellbores to
SPP. Highlights of the transaction include:
- Sale of 59 proved developed producing wellbores in the
non-operated Palmetto Field in the Eagle Ford with average forecast
production for 2015 estimated to be 1,000 BOE/D and proved reserves
of approximately 5.2 MMBOE
- Production sold represents approximately 2% of the SN's total
net production volume
- Valuation of approximately $85,000 per estimated BOE/D and ~7.7x 2015
estimated EBITDA for the assets, representing a premium to SN's
current public trading multiples.
- Transaction enables SN to raise cash in a low commodity price
environment by bringing forward future production currently
generated by low-rate, older producing assets and positions SN to
re-invest the proceeds in potentially higher-returning
opportunities while maintaining a strong balance sheet and cash
position.
- Enables SN to access capital today, and potentially in the
future, without the need to engage in debt or dilutive equity
offerings through the availability of SPP as a third financing
vehicle.
- Sale only conveys interests in certain wellbores at existing
producing intervals, retaining upside for SN from PUD, probable,
and possible locations as well as any new locations that come as
result of down-spacing, stacking of new horizontal wellbores, and
development of any non-Eagle Ford formations such as the Austin
Chalk or the Buda.
- Sale structured as an escalating working interest such that SN
delivers an automatically increasing percentage of its current 50%
W.I. annually over a period of five years, including the current
year, while being paid for all interests at closing and retaining
the interim production for its account until each annual working
interest escalation effective date.
- Consideration received consists of $83.0
million cash, subject to normal and customary closing and
post-closing adjustments, and 1,052,632 Common Units of SPP valued
at approximately $2.0
million.
Tony Sanchez, III, President and
Chief Executive Officer of Sanchez Energy, commented, "This
transaction, which we feel is not only repeatable, but may
potentially include midstream assets in the future, enables us to
enhance liquidity at an advantageous cost of capital to fund our
growth without having to increase leverage or dilute our
shareholders by issuing equity. With a focus on capital
efficiency, we are selling low-decline cash flowing assets and
using the proceeds to re-invest in higher rate of return drilling
opportunities and other projects. Furthermore, by selling
only certain wellbores the Company's inventory of future locations
remains unchanged. We retain the upside potential from PUD
drilling, down-spacing, and stacking of future development wells in
the Upper and Lower Eagle Ford, as well as the potential resource
development from non-Eagle Ford formations. The equity
component of the purchase price will allow the Company to
participate in the appreciation of the value of SPP's equity as it
continues to move closer to the completion of its transformation
and resumption of distributions. We believe that the
valuation received for this production is in excess of the levels
where our equity is currently trading and is thus accretive to our
balance sheet and at a level which is optimal in terms of cost of
capital for the Company."
Speaking to the operational impact of the sale, Sanchez added,
"as a result of the strong performance of our recent drilling
results at Catarina, we are not
reducing our production guidance for the remainder of 2015.
We will initiate guidance for the second quarter of 2015 and update
our full year guidance after our planned first quarter operational
update late in April."
The terms of the transaction were approved, subject to the
execution of definitive documentation, by the Board of Directors of
Sanchez Energy, following the approval of the Board's Audit
Committee, which is composed of independent directors.
Jefferies LLC acted as sole financial advisor to the Audit
Committee of the Board of Directors of Sanchez Energy Corporation
and delivered a fairness opinion from a financial point of view in
connection with the transaction. Richards, Layton & Finger represented the
Audit Committee as legal advisors.
ABOUT SANCHEZ ENERGY CORPORATION
Sanchez Energy is an independent exploration and production
company focused on the acquisition and development of
unconventional oil resources in the onshore U.S. Gulf Coast, with a
current focus on the Eagle Ford Shale in South Texas where it has assembled
approximately 226,000 net acres, and the Tuscaloosa Marine Shale.
For more information about Sanchez Energy, please visit our
website: www.sanchezenergycorp.com
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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. 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," 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, continued production of oil and gas
at historical rates, realization of anticipated benefits from the
disposition, costs of operations, delays, and any other
difficulties related to producing oil or gas, the price of oil or
gas, marketing and sales of produced oil and gas, estimates made in
evaluating reserves and resource potential, competition and general
economic conditions and other factors described in Sanchez Energy's
Annual Report for the fiscal year ended December 31, 2014. Further information on
such assumptions, risks and uncertainties is available in Sanchez
Energy's filings with the Securities and Exchange Commission
("SEC"). Sanchez Energy's filings with the SEC are available on its
website at www.sanchezenergycorp.com and on the SEC's website at
www.sec.gov. 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.
Cautionary Note to U.S. Investors
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible reserves.
We may use certain terms in our press releases, such as net
resource potential and other variations of the foregoing terms that
the SEC's guidelines strictly prohibit us from including in filings
with the SEC. U.S. Investors are urged to consider
closely the reserves disclosures in our filings with the SEC
available on our website at www.sanchezenergycorp.com and the SEC's
website at www.sec.gov. You can also obtain this information
from the SEC by calling its general information line at
1-800-SEC-0330.
Company contact:
Mike Long
Executive Vice President and Chief Financial Officer
Sanchez Energy Corporation
713-783-8000
Gleeson Van Riet
Senior Vice President, Capital Markets and Investor Relations, and
Interim Co-Chief Financial Officer
Sanchez Energy Corporation
713-783-8000
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SOURCE Sanchez Energy Corporation