Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy” or the
“Company”), today announced operating results for the third quarter
2017. Highlights for the quarter include:
- Production totaled approximately 6.8 million barrels of oil
equivalent (“MMBoe”), or 73,783 barrels of oil equivalent per day
(“Boe/d”), which represents an increase of 43 percent over third
quarter 2016 production and is at the high end of the Company’s
guidance for the third quarter 2017 despite unprecedented levels of
rainfall and flooding along the Gulf Coast and in South Texas
associated with Hurricane Harvey and subsequent localized storms;
- Three Lower Eagle Ford A and three Lower Eagle Ford B wells,
which were brought on-line in the Briscoe Catarina West area of
Comanche, in 250 foot staggered lateral spacing tests, are
producing in-line with the Company’s Lower Eagle Ford type
curve;
- The success of the Lower Eagle Ford 250 foot staggered lateral
spacing test during the third quarter 2017 doubles the Company’s
Lower Eagle Ford opportunity set, adding up to 800 gross Lower
Eagle Ford well locations to the Comanche asset’s drilling
inventory;
- Eight Lower Eagle Ford wells with an average lateral length of
approximately 7,500 feet were brought on-line at the Briscoe
Cochina West area of Comanche, achieved an average 24-hour peak
production rate of approximately 990 Boe/d, approximately 80
percent of which was oil;
- The D-17 pad in Western Catarina, a six well pad with an
average lateral length of approximately 6,200 feet that utilized
the Company’s standard completion design of approximately 1,700
pounds of proppant per lateral foot, realized an average 24-hour
initial production rate of approximately 1,479 Boe/d, with
approximately 28 percent oil-weighting;
- The Company brought 41 Comanche wells on-line during the third
quarter 2017, with an additional 103 Comanche wells currently
undergoing or awaiting completion; and
- The Company is currently producing at a record rate in excess
of 80,000 Boe/d.
MANAGEMENT COMMENTS“The third
quarter 2017 saw unprecedented levels of rainfall and flooding
along the Gulf Coast due to Hurricane Harvey as well as major
flooding from localized storms in the Western Eagle Ford,” said
Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. “As a
result of the efforts of our operations and marketing teams, the
Company delivered production of approximately 74,000 Boe/d for the
quarter, which was at the high end of our third quarter
guidance.
“During the quarter, we received the initial
results of the staggered multi-zone development in the Lower Eagle
Ford at Comanche, which confirmed our thesis that two distinct
intervals of independently productive reservoirs exist on that
asset. Multi-zone development testing has been a priority for
us in our Comanche development efforts. To that end, we brought six
stacked horizontal Lower Eagle Ford A and Lower Eagle Ford B wells
on-line during the quarter in the Briscoe Catarina West area of
Comanche in a 250 foot staggered spacing test at an average lateral
length of approximately 6,000 feet. Both targets are
displaying production rates that are in-line with expectations,
which validates our thesis that there are two distinct,
independently productive reservoirs in the Lower Eagle Ford on the
Western portion of the recently acquired acreage. The development
of two Lower Eagle Ford zones doubles the Lower Eagle Ford
opportunity set at Comanche, adding up to 800 gross Lower Eagle
Ford well locations to the Company’s drilling inventory. Also in
the Briscoe Catarina West area of Comanche, we have six Upper Eagle
Ford A and C dual zone lateral tests in initial flowback, which are
exhibiting promising results that include higher than anticipated
oil weightings.
“At Catarina, we brought on-line 23 wells during
the quarter. The highlight was the six well D-17 pad, which
achieved an average 24-hour initial production rate of
approximately 1,479 Boe/d. These well results reflect the first
group of Catarina wells completed since our decision to return to
the standard completion design of approximately 1,730 pounds of
proppant per lateral foot. Work to boost field compression and add
additional gathering lines and separation capacity reduced facility
constraints at Catarina and aided in increasing production during
the quarter.
“During the third quarter, we reduced our
operated rig count from eight rigs to four, while largely
maintaining the pace of completion operations, with five completion
spreads currently operating. The two weather events resulted in
temporary delays in our drilling and completion activity due to
road flooding and material sourcing downtime. As a result of these
delays, we anticipate bringing fewer wells on-line by year-end than
previously forecasted. The late-September storm, which produced
record three day accumulations of as much as 18 inches of rain in
parts of Dimmit County, had a greater impact on our operations and
production than did Hurricane Harvey. This significant rain event
caused us to shut-in an average of 6,000 net Boe/d of production
for five days in late-September and 4,000 net Boe/d of production
for an additional 15 days in October. Taking into account the
impact of the storms, we reiterate the Company’s previous
production guidance range of 80,000 to 84,000 Boe/d for the fourth
quarter, though anticipate that production will likely be near the
lower end of this range.
OPERATIONS UPDATEDuring the
third quarter 2017, the Company spud 55 gross (17.96 net) wells and
completed 77 gross (44.9 net) wells.
At Maverick, the Company has drilled 22 wells on
the Hausser lease in 2017. Completion activity on these wells began
in June and is expected to continue through the fourth quarter
2017.
During the third quarter 2017, the Company
brought on-line 41 wells at Comanche, 23 wells at Catarina, and
eight wells at Maverick. At Catarina, by exceeding the 50 well
annual drilling commitment in the prior two drilling periods by 20
wells and 18 wells, respectively, the Company maximized the
allowable 30 well bank that can be applied towards the current
annual drilling commitment period, which extends from July 1, 2017
to June 30, 2018. As of Sept. 30, 2017, the Company had drilled an
additional four wells towards the remaining 20 wells required to
meet its current annual drilling commitment.
As of Sept. 30, 2017, the Company had 2,047
gross (808.4 net) producing wells with 126 gross wells in various
stages of completion, as detailed in the following table:
|
|
|
|
Gross |
|
|
Gross |
|
Wells Waiting / |
Project |
|
Producing |
|
Undergoing |
Area |
|
Wells |
|
Completion |
Catarina |
|
381 |
|
8 |
Comanche |
|
1,518 |
|
103 |
Maverick |
|
50 |
|
13 |
Palmetto |
|
84 |
|
2 |
TMS /
Other |
|
14 |
|
0 |
Total |
|
2,047 |
|
126 |
PRODUCTION UPDATEThe Company’s estimated total
production for the third quarter 2017 averaged approximately 73,783
Boe/d. The Company’s production mix during the third quarter 2017
consisted of approximately 30 percent oil, 34 percent natural gas
liquids (“NGLs”), and 36 percent natural gas.
Production during the third quarter 2017 was at
the high end of the Company’s guidance despite the operational
challenges caused by unprecedented levels of rainfall and flooding,
as strong well results across all of the Company’s Western Eagle
Ford acreage led to a steady increase in production during the
quarter. On the basis of this performance, Sanchez Energy
reiterates its fourth quarter 2017 production guidance of 80,000 to
84,000 Boe/d. However, the Company experienced completion delays in
September and October 2017 as a result of storm activity that will
negatively impact forecast volumes and, as a result, anticipates
production to be near the lower end of this production guidance
during the fourth quarter 2017.
HEDGING UPDATEThe Company has
hedged approximately 20,000 barrels (“Bbls”) per day of its 2018
oil production and approximately 189,000 million British thermal
units (“MMBtu”) per day of its 2018 natural gas production and
8,600 Bbls per day of its 2019 oil production and approximately
48,000 MMBtu per day of its 2019 natural gas production on a
consolidated basis. Additional information on the Company’s hedge
positions can be found in the Sanchez Energy Investor Presentation
posted at www.sanchezenergycorp.com.
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 286,000 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 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, failure
to realize benefits from our transactions with Sanchez Midstream
Partners LP, 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 SmithVP
Investor Relations(281) 925-4828
Cham KingInvestor Relations & Capital
Markets(713) 756-2797
General Inquiries: (713)
783-8000 www.sanchezenergycorp.com