Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy” or the
“Company”), today announced operating and financial results for the
second quarter 2017. Highlights include:
- Second quarter 2017 production totaled approximately 6.7
million barrels of oil equivalent (“MMBoe”), or approximately
73,341 barrels of oil equivalent per day (“Boe/d”), an increase of
approximately 43 percent over first quarter 2017 production;
- Four Lower Eagle Ford horizontal wells, with an average lateral
length of approximately 10,000 feet, that were brought on-line at
the Stumberg Ranch during the second quarter 2017 achieved an
average 30-day production rate of approximately 1,950 Boe/d, which
is approximately 20 percent above the type curve after normalizing
for lateral length;
- Second quarter 2017 revenues were approximately $175.7 million,
an increase of approximately 31 percent over the first quarter
2017;
- Adjusted Revenue (a non-GAAP financial measure), inclusive of
hedge settlements, was approximately $182.9 million during the
second quarter 2017;
- The Company reported net income of $46.3 million during the
second quarter 2017 compared to $9.7 million during the first
quarter of 2017 and Adjusted EBITDA (a non-GAAP financial measure)
of approximately $85.1 million during the second quarter 2017,
which was up approximately 68 percent when compared to the first
quarter 2017;
- The Company raised approximately $67 million in cash during the
second quarter through the sale of its Marquis asset, remaining
Cotulla assets, and 10 percent interest in Silver Oak II Gas
Processing Facility; and
- As of June 30, 2017, the Company had approximately $560 million
in liquidity, with approximately $128 million in cash and cash
equivalents and approximately $432 million of combined borrowing
capacity under the Company’s two bank credit facilities.
MANAGEMENT COMMENTS
“The second quarter 2017 marked our first full
quarter with the newly acquired Comanche assets,” said Tony
Sanchez, III, Chief Executive Officer of Sanchez Energy.
“Since closing the Comanche transaction on March 1, 2017, we have
been able to utilize our completion methods on the newly acquired
acreage to drive excellent results, contributing to a production
increase of 43 percent over the prior quarter. As previously
reported, based on available data for Dimmit County we believe our
most recent Stumberg Ranch horizontal wells at Comanche are
achieving record production levels, with the Stumberg Ranch 55H
well showing a 24-hour initial production rate of approximately
3,800 Boe/d and oil-weighing of approximately 72 percent.
Given the well’s production results, the Stumberg Ranch 55H
appears on pace to achieve payout in only 12 months at current
strip pricing. On average, the four long horizontal wells at
Stumberg Ranch achieved 30-day production rates of 1,950
Boe/d. These strong production results, combined with our
focus on well costs, allow us to deliver solid rates of return on
our drilling activities, even in today’s challenging commodity
price environment.
“Driven by the positive impact of the Comanche
transaction, our second quarter 2017 Adjusted EBITDA increased more
than 68 percent over the prior quarter. We achieved this
level of financial performance despite the impact of the large
completion trials at Catarina, which did not provide the production
response we expected. As we disclosed in our operational
update last month, we have returned to our standard well completion
design for the 32 Catarina wells that remain in our 2017
development plan, and now expect to reach our production growth
expectations of 90,000 Boe/d to 100,000 Boe/d in the first half of
2018. We also anticipate that cash margins will improve
throughout the second half of 2017 and into 2018, as increases in
production will tend to reduce our costs on a per unit basis.
“Given the current operating environment, we
remain focused on maintaining adequate liquidity to execute our
drilling plans. With that in mind, we raised approximately
$67 million during the quarter from the sale of our Marquis asset,
remaining Cotulla assets, and 10 percent interest in Silver Oak II
Gas Processing Facility, resulting in a cash balance of $128
million as of June 30, 2017 and total liquidity, including
borrowing capacity under our two credit facilities, of
approximately $560 million. Additionally, in July 2017
we announced our intention to reduce our 2018 capital spending by
approximately $75 million to $100 million, compared to our original
$500 million guidance, in order to better align capital spending
with operating cash flow, while remaining focused on higher rate of
return projects that optimize capital efficiency. This
reduction in capital spending, together with our strong liquidity
position and bank of 30 wells against our 2017-18 Catarina drilling
commitment, provides us with a considerable amount of financial and
operating flexibility as we look to execute our plans over the next
12 to 18 months, and drive shareholder value.”
OPERATIONS UPDATE
During the second quarter 2017, the Company spud
48 gross (33.9 net) wells and completed and turned on-line 63 gross
(27 net) wells. Sanchez Energy brought on-line 42 wells at
Comanche, 11 wells at Catarina, 6 wells at Maverick and four
non-operated wells. As of June 30, 2017, the Company had
drilled 68 wells, surpassing the 50 well annual drilling commitment
at Catarina that ran from July 1, 2016 to June 30, 2017. With
18 wells above the drilling commitment, and a bank of wells carried
over from previous year’s drilling commitment, Sanchez Energy has
banked the maximum allowable 30 wells as of June 30, 2017, which
can be used towards the next annual drilling commitment that runs
from July 1, 2017 through June 30, 2018.
The cost of wells completed at Catarina during
the second quarter 2017 averaged approximately $3.9 million per
well as the Company tested significantly enhanced completion
designs. The Catarina wells were completed with proppant
loading of approximately 3,000 pounds per foot of proppant, which
is 70 percent more proppant and fluids when compared to well
designs used by the Company in 2016. The larger completion design
trial led to facility constraints and lower than expected
production performance due to apparent over-stimulation of the
reservoir. Therefore, the Company has returned to its
standard well completion design for the 32 Catarina wells that
remain in its 2017 development plan.
At Maverick, the Company has drilled 22 wells on
the Hausser lease. Completion activity on these wells began
late in the second quarter and is expected to continue through the
third quarter 2017.
At Comanche, the Company brought on-line 42
horizontal wells in the second quarter, all part of the large
inventory of drilled but uncompleted (“DUC”) wells acquired in the
transaction that closed on March 1, 2017. Within 45 days of
closing, 9 DUCs, relatively short in lateral length (approximately
4,400 feet) had been completed and brought on-line in Area
3. In the middle of the second quarter, four horizontal
wells with an average lateral length of approximately 10,000 feet
at Stumberg Ranch were brought on-line in Area 3. Sanchez
Energy brought on-line an additional 29 horizontal wells with an
average lateral length of approximately 6,200 feet at Briscoe
Catarina North, also in Area 3 of Comanche. Since the close of the
second quarter, an additional 15 DUCs were brought on-line in Area
5 at Briscoe Cochina East Ranch. The Company remains on pace
to complete its 132 gross DUC (32 net) inventory within 12 months
of closing the Comanche transaction.
As of June 30, 2017, the Company had 1,975 gross
(767 net) producing wells with 154 gross wells in various stages of
completion, as detailed in the following table:
|
|
|
|
|
Project
Area |
|
Gross
Producing
Wells |
|
Gross
Wells Waiting/Undergoing
Completion |
Catarina |
|
358 |
|
21 |
Comanche |
|
1,477 |
|
110 |
Maverick |
|
42 |
|
21 |
Palmetto |
|
84 |
|
2 |
TMS /
Other
|
|
14 |
|
— |
Total |
|
1,975 |
|
154 |
PRODUCTION VOLUMES, AVERAGE SALES PRICES, AND OPERATING
COSTS PER BOE
The Company’s production mix during the second
quarter 2017 consisted of approximately 31 percent oil, 32 percent
natural gas liquids (“NGL”), and 37 percent natural gas. By
asset area, Catarina, Comanche, Marquis, Maverick, and
Palmetto/TMS/Other comprised approximately 54 percent, 38 percent,
two percent, four percent, and two percent, respectively, of the
Company’s total second quarter 2017 production volumes.
Revenues of approximately $175.7 million during
the second quarter 2017 were up 58 percent compared to the second
quarter 2016 and up 31 percent compared to the first quarter 2017
revenue of approximately $133.8 million. Adjusted Revenue for
the second quarter 2017, a non-GAAP financial measure that includes
$7.2 million in hedging settlement gains was $182.9
million.
Commodity price realizations during the second
quarter 2017, including the impact of hedge settlements, were
$47.79 per barrel (“Bbl”) of oil, $17.31 per Bbl of NGL, and $3.16
per thousand cubic feet (“Mcf”) of natural gas.
Production, average sales prices, and operating
costs and expenses per barrel of oil equivalent (“Boe”) for the
second quarter 2017 are summarized in the following table:
|
|
Three Months Ended |
|
Six Months Ended
|
|
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbl) |
|
|
2,075 |
|
|
1,634 |
|
|
3,624 |
|
|
3,274 |
|
Natural
gas liquids (MBbl) |
|
|
2,130 |
|
|
1,519 |
|
|
3,501 |
|
|
3,207 |
|
Natural
gas (MMcf) |
|
|
14,814 |
|
|
11,601 |
|
|
25,270 |
|
|
22,497 |
|
Total oil
equivalent (MBoe) |
|
|
6,674 |
|
|
5,087 |
|
|
11,336 |
|
|
10,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Excluding
Derivatives(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($
per Bbl) |
|
$ |
43.90 |
|
$ |
40.25 |
|
$ |
45.36 |
|
$ |
33.13 |
|
Natural
gas liquids ($ per Bbl) |
|
|
17.31 |
|
|
14.47 |
|
|
18.27 |
|
|
11.54 |
|
Natural
gas ($ per Mcf) |
|
|
3.22 |
|
|
2.00 |
|
|
3.21 |
|
|
2.01 |
|
Oil
equivalent ($ per Boe) |
|
$ |
26.33 |
|
$ |
21.82 |
|
$ |
27.31 |
|
$ |
18.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Including
Derivatives(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($
per Bbl) |
|
$ |
47.79 |
|
$ |
54.88 |
|
$ |
47.56 |
|
$ |
53.79 |
|
Natural
gas liquids ($ per Bbl) |
|
|
17.31 |
|
|
14.47 |
|
|
18.27 |
|
|
11.54 |
|
Natural
gas ($ per Mcf) |
|
|
3.16 |
|
|
2.93 |
|
|
3.07 |
|
|
2.91 |
|
Oil
equivalent ($ per Boe) |
|
$ |
27.40 |
|
$ |
28.64 |
|
$ |
27.68 |
|
$ |
27.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit costs per Boe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production expenses(3) |
|
$ |
9.72 |
|
$ |
8.83 |
|
$ |
9.27 |
|
$ |
8.76 |
|
Production and ad valorem taxes |
|
$ |
1.32 |
|
$ |
1.22 |
|
$ |
1.35 |
|
$ |
0.99 |
|
Depreciation, depletion, amortization and accretion |
|
$ |
7.62 |
|
$ |
8.52 |
|
$ |
7.42 |
|
$ |
8.83 |
|
Impairment of oil and natural gas properties |
|
$ |
— |
|
$ |
17.18 |
|
$ |
— |
|
$ |
10.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Excludes the impact of derivative instrument settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
Includes the impact of derivative instrument settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Includes a $3.7 million and $7.4 million
non-cash gain for the three and six months ended June 30,
2017,respectively, and $3.7 million and $7.4 million non-cash gain
for the three and six months ended June 30,2016, respectively, from
the amortization of the deferred gain on Western Catarina Midstream
divestiture. |
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES
Cash outflows for capital expenditures during the second quarter
2017 totaled approximately $129.6 million. The Company spent
approximately 89 percent of its capital expenditures on drilling,
completion, infrastructure, and geology and geophysics activities,
and 11 percent of its capital expenditures on leasing and business
development activities.
FINANCIAL RESULTS
On a GAAP basis, the Company reported net income
attributable to common stockholders of $24.2 million for the second
quarter 2017, which includes non-cash mark-to-market gains related
to hedging activities of $52.4 million and $2.8 million in one-time
costs related to the Comanche transaction and other non-recurring
items. This compares to the Company’s reported net loss
attributable to common stockholders of $186.9 million for the
second quarter 2016.
The Company’s second quarter 2017 Adjusted
EBITDA (a non-GAAP financial measure) of approximately $85.1
million was up approximately 68 percent when compared to first
quarter 2017 Adjusted EBITDA of $50.6 million. Second quarter
2017 Adjusted EBITDA includes a $3 million expense related to
phantom units. The Company’s Adjusted Loss (a non-GAAP financial
measure) for the second quarter of $22.6 million excludes $52.4
million in non-cash mark-to-market gains related to hedging
activities and $2.8 million in one-time costs related to the
Comanche transaction and other non-recurring items. The
Company’s second quarter 2017 results compare to Adjusted EBITDA of
approximately $76.5 million and an Adjusted Loss of approximately
$2.5 million reported in the second quarter 2016. Adjusted
EBITDA and Adjusted Loss are non-GAAP financial measures defined in
the tables included with today’s news release.
GENERAL AND ADMINISTRATIVE EXPENSE
On a GAAP basis, the Company reported general
and administrative (“G&A”) expenses of $29.7 million in the
second quarter 2017. Included in G&A expenses is $2.8
million in acquisition and divestiture costs, $4.3 million of
non-cash equity compensation, and $3 million associated with
phantom units that vest periodically in accordance with the terms
of the Company’s equity-based incentive awards. Excluding
these items, G&A expenses during the second quarter 2017 were
approximately $19.5 million, which the Company believes is more
reflective of its baseline G&A expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Six Months Ended June
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Base
general and administrative |
|
$ |
19,506 |
|
$ |
13,685 |
|
$ |
39,865 |
|
$ |
29,819 |
Stock-based compensation - restricted stock (non-cash)
|
|
|
4,335 |
|
|
6,784 |
|
|
16,426 |
|
|
9,595 |
Stock-based compensation - phantom units |
|
|
3,024 |
|
|
3,092 |
|
|
13,965 |
|
|
3,627 |
Acquisition and divestiture costs included in G&A |
|
|
2,848 |
|
|
422 |
|
|
26,922 |
|
|
422 |
Total general and administrative |
|
$ |
29,713 |
|
$ |
23,983 |
|
$ |
97,178 |
|
$ |
43,463 |
HEDGING UPDATE
As of Aug. 9, 2017, the Company’s hedge position
consisted of 21,522 barrels of oil per day (“Bbls/d”) and 161,818
million British thermal units of natural gas per day (“MMBtu/d”)
for the second half of 2017, 17,521 Bbls/d and 186,881 MMBtu/d in
2018, 8,627 Bbls/d and 48,340 MMBtu/d in 2019 and 4,187 Bbls/d and
25,945 MMBtu/d in the first quarter 2020. Additional
information on the Company’s hedge positions by entity can be found
in the Sanchez Energy Investor Presentation posted at
www.sanchezenergycorp.com.
LIQUIDITY AND CREDIT
FACILITY
As of June 30, 2017, the Company had liquidity
of approximately $560 million, which consisted of approximately
$128 million in cash and cash equivalents, an undrawn Sanchez
Energy revolving credit facility with a borrowing base of $350
million and an elected commitment amount of $300 million, and
$131.5 million of available capacity under a subsidiary-level
revolving credit facility, non-recourse to Sanchez Energy, with a
borrowing base of $330 million.
SHARE COUNT
As of June 30, 2017, the Company had
approximately 82.5 million common shares outstanding.
Assuming all Series A Convertible Perpetual Preferred Stock
and Series B Convertible Perpetual Preferred Stock were converted,
total outstanding common shares as of June 30, 2017 would have been
approximately 95 million. For the three months ended June 30,
2017, the weighted average number of unrestricted common shares
used to calculate net loss attributable to common stockholders per
basic and diluted common share, which are determined in accordance
with GAAP, was 76.4 million and 89 million, respectively.
CONFERENCE CALL
Sanchez Energy will host a conference call for
investors on Wednesday, Aug. 9, 2017, at 1:00 p.m. Central Time
(2:00 p.m. Eastern Time). Interested investors can listen to
the call via webcast, both live and rebroadcast, over the Internet
at: http://edge.media-server.com/m/p/9oge7pxu
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 it has assembled approximately 356,000
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 the Company 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 Company, the
expected synergies and benefits related to the Comanche
transaction, and the Company’s G&A expenses for the remainder
of the year. 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 the Company, 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 acquired
assets, including the Comanche assets, and our joint ventures
(including our partnership with affiliates of the Blackstone Group,
L.P.) to perform as anticipated, inability to successfully
integrate the various assets acquired by us into our operations,
fully identify potential problems with respect to such properties
and accurately estimate reserves, production and costs with respect
to such properties, 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, 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 or production, our expectations regarding the
results of our efforts to improve the efficiency of our operations
to reduce our costs and other factors described in the Company’s
most recent Annual Report on Form 10-K and any updates to those
risk factors set forth in the Company’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"). The Company’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 the
Company'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 the Company's forward-looking statements.
Any forward-looking statement speaks only as of the date on
which such statement is made and the Company 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.
SANCHEZ ENERGY
CORPORATIONCONSOLIDATED STATEMENT OF OPERATIONS DATA
(unaudited)(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months
Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
sales |
|
$ |
91,096 |
|
|
$ |
65,786 |
|
|
$ |
164,372 |
|
|
$ |
108,468 |
|
|
Natural
gas liquid sales |
|
|
36,873 |
|
|
|
21,979 |
|
|
|
63,973 |
|
|
|
37,024 |
|
|
Natural
gas sales |
|
|
47,735 |
|
|
|
23,203 |
|
|
|
81,201 |
|
|
|
45,292 |
|
|
Total revenues |
|
|
175,704 |
|
|
|
110,968 |
|
|
|
309,546 |
|
|
|
190,784 |
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production expenses |
|
|
64,848 |
|
|
|
44,919 |
|
|
|
105,073 |
|
|
|
89,612 |
|
|
Production and ad valorem taxes |
|
|
8,799 |
|
|
|
6,188 |
|
|
|
15,323 |
|
|
|
10,131 |
|
|
Depreciation, depletion, amortization and accretion |
|
|
50,851 |
|
|
|
43,342 |
|
|
|
84,057 |
|
|
|
90,308 |
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
109,464 |
|
|
General
and administrative (1) |
|
|
29,713 |
|
|
|
23,983 |
|
|
|
97,178 |
|
|
|
43,463 |
|
|
Total
operating costs and expenses |
|
|
154,211 |
|
|
|
205,812 |
|
|
|
301,631 |
|
|
|
342,978 |
|
|
Operating income (loss) |
|
|
21,493 |
|
|
|
(94,844 |
) |
|
|
7,915 |
|
|
|
(152,194 |
) |
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
150 |
|
|
|
158 |
|
|
|
507 |
|
|
|
483 |
|
|
Other
income (expense) |
|
|
(6,618 |
) |
|
|
211 |
|
|
|
3,917 |
|
|
|
(202 |
) |
|
Gain on
disposal of assets |
|
|
7,133 |
|
|
|
— |
|
|
|
12,276 |
|
|
|
— |
|
|
Interest
expense |
|
|
(35,961 |
) |
|
|
(31,822 |
) |
|
|
(68,986 |
) |
|
|
(63,428 |
) |
|
Earnings
from equity investments |
|
|
242 |
|
|
|
2,179 |
|
|
|
677 |
|
|
|
2,691 |
|
|
Net gains
(losses) on commodity derivatives |
|
|
59,615 |
|
|
|
(58,750 |
) |
|
|
98,496 |
|
|
|
(35,993 |
) |
|
Total
other income (expense) |
|
|
24,561 |
|
|
|
(88,024 |
) |
|
|
46,887 |
|
|
|
(96,449 |
) |
|
Income
(loss) before income taxes |
|
|
46,054 |
|
|
|
(182,868 |
) |
|
|
54,802 |
|
|
|
(248,643 |
) |
|
Income
tax benefit |
|
|
255 |
|
|
|
— |
|
|
|
1,208 |
|
|
|
— |
|
|
Net income (loss) |
|
|
46,309 |
|
|
|
(182,868 |
) |
|
|
56,010 |
|
|
|
(248,643 |
) |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends |
|
|
(3,987 |
) |
|
|
(3,987 |
) |
|
|
(7,974 |
) |
|
|
(7,974 |
) |
|
Preferred
unit dividends and distributions |
|
|
(10,949 |
) |
|
|
— |
|
|
|
(27,415 |
) |
|
|
— |
|
|
Preferred
unit amortization |
|
|
(5,282 |
) |
|
|
— |
|
|
|
(6,992 |
) |
|
|
— |
|
|
Net
income allocable to participating securities |
|
|
(1,893 |
) |
|
|
— |
|
|
|
(1,021 |
) |
|
|
— |
|
|
Net income (loss) attributable to common
stockholders |
|
$ |
24,198 |
|
|
$ |
(186,855 |
) |
|
$ |
12,608 |
|
|
$ |
(256,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share - basic |
|
$ |
0.32 |
|
|
$ |
(3.20 |
) |
|
$ |
0.17 |
|
|
$ |
(4.38 |
) |
|
Weighted
average number of shares used to calculate net income (loss)
attributable to common stockholders - basic |
|
|
76,395 |
|
|
|
58,413 |
|
|
|
73,045 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per common share - diluted |
|
$ |
0.31 |
|
|
$ |
(3.20 |
) |
|
$ |
0.17 |
|
|
$ |
(4.38 |
) |
|
Weighted
average number of shares used to calculate net income (loss)
attributable to commonstockholders - diluted |
|
|
89,015 |
|
|
|
58,413 |
|
|
|
73,145 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
Inclusive of non-cash stock-based compensation expense of $4,335
and $6,784, respectively, for the three months ended June 30, 2017
and 2016,and $16,426 and $9,595, respectively, for the six months
ended June 30, 2017 and 2016. |
SANCHEZ ENERGY CORPORATIONCONSOLIDATED
BALANCE SHEET (unaudited)(in thousands, except per share
amounts) |
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
128,247 |
|
|
$ |
501,917 |
|
|
Oil and
natural gas receivables |
|
|
67,271 |
|
|
|
41,057 |
|
|
Joint
interest billings receivables |
|
|
23,080 |
|
|
|
496 |
|
|
Accounts
receivable - related entities |
|
|
5,691 |
|
|
|
6,401 |
|
|
Fair
value of derivative instruments |
|
|
38,926 |
|
|
|
— |
|
|
Other
current assets |
|
|
9,630 |
|
|
|
12,934 |
|
|
Total
current assets |
|
|
272,845 |
|
|
|
562,805 |
|
|
Oil and
natural gas properties, at cost, using the full cost method: |
|
|
|
|
|
|
|
Proved
oil and natural gas properties |
|
|
4,186,528 |
|
|
|
3,164,115 |
|
|
Unproved
oil and natural gas properties |
|
|
477,863 |
|
|
|
231,424 |
|
|
Total oil
and natural gas properties |
|
|
4,664,391 |
|
|
|
3,395,539 |
|
|
Less:
Accumulated depreciation, depletion, amortization and
impairment |
|
|
(2,818,705 |
) |
|
|
(2,736,951 |
) |
|
Total
oil and natural gas properties, net |
|
|
1,845,686 |
|
|
|
658,588 |
|
|
|
|
|
|
|
|
|
|
Other
assets: |
|
|
|
|
|
|
|
Fair
value of derivative instruments |
|
|
24,067 |
|
|
|
— |
|
|
Investments (Investment in SNMP measured at fair value of
$27.2million and $26.8 million as of June 30, 2017 and
December 31, 2016,respectively) |
|
|
33,851 |
|
|
|
39,656 |
|
|
Other
assets |
|
|
41,604 |
|
|
|
25,231 |
|
|
Total
assets |
|
$ |
2,218,053 |
|
|
$ |
1,286,280 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
2,784 |
|
|
$ |
1,076 |
|
|
Other
payables |
|
|
3,067 |
|
|
|
2,251 |
|
|
Accrued
liabilities: |
|
|
|
|
|
|
|
Capital
expenditures |
|
|
96,336 |
|
|
|
35,154 |
|
|
Other |
|
|
89,083 |
|
|
|
82,458 |
|
|
Deferred
premium liability |
|
|
— |
|
|
|
2,079 |
|
|
Fair
value of derivative instruments |
|
|
2,229 |
|
|
|
31,778 |
|
|
Other
current liabilities |
|
|
79,362 |
|
|
|
22,201 |
|
|
Total
current liabilities |
|
|
272,861 |
|
|
|
176,997 |
|
|
|
|
|
|
|
|
|
|
Long
term debt, net of premium, discount and debt issuance costs |
|
|
1,893,789 |
|
|
|
1,712,767 |
|
|
Asset
retirement obligations |
|
|
31,848 |
|
|
|
25,087 |
|
|
Fair
value of derivative instruments |
|
|
1,306 |
|
|
|
3,236 |
|
|
Other
liabilities |
|
|
56,387 |
|
|
|
64,333 |
|
|
Total
liabilities |
|
|
2,256,191 |
|
|
|
1,982,420 |
|
|
Commitments and contingencies (Note 16) |
|
|
|
|
|
|
|
Mezzanine equity: |
|
|
|
|
|
|
|
Preferred
units ($1,000 liquidation preference, 500,000 unitsauthorized;
500,000 and zero units issued and outstanding as ofJune 30, 2017
and December 31, 2016, respectively) |
|
|
409,185 |
|
|
|
— |
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Preferred
stock ($0.01 par value, 15,000,000 shares authorized;1,838,985
shares issued and outstanding as of June 30, 2017 andDecember 31,
2016 of 4.875% Convertible Perpetual PreferredStock, Series A;
3,527,830 shares issued and outstanding as ofJune 30, 2017 and
December 31, 2016 of 6.500% ConvertiblePerpetual Preferred Stock,
Series B) |
|
|
53 |
|
|
|
53 |
|
|
Common
stock ($0.01 par value, 150,000,000 shares authorized;82,504,903
and 66,156,378 shares issued and outstanding as ofJune 30, 2017 and
December 31, 2016, respectively) |
|
|
829 |
|
|
|
670 |
|
|
Additional paid-in capital |
|
|
1,347,426 |
|
|
|
1,112,397 |
|
|
Accumulated deficit |
|
|
(1,795,631 |
) |
|
|
(1,809,260 |
) |
|
Total
stockholders' deficit |
|
|
(447,323 |
) |
|
|
(696,140 |
) |
|
Total
liabilities and stockholders' deficit |
|
$ |
2,218,053 |
|
|
$ |
1,286,280 |
|
|
|
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP Reconciliation
– Adjusted EBITDA
Adjusted EBITDA is a non‑GAAP financial measure
that is used as a supplemental financial measure by our management
and by external users of our financial statements, such as
investors, commercial banks and others, to assess our operating
performance as compared to that of other companies in our industry,
without regard to financing methods, capital structure or
historical costs basis. It is also used to assess our ability to
incur and service debt and fund capital expenditures. Our
Adjusted EBITDA should not be considered an alternative to net
income (loss), operating income (loss), cash flows provided by
(used in) operating activities or any other measure of financial
performance or liquidity presented in accordance with
U.S. GAAP. Our Adjusted EBITDA may not be comparable to
similarly titled measures of another company because all companies
may not calculate Adjusted EBITDA in the same manner. The
following table presents a reconciliation of our net loss to
Adjusted EBITDA (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Three MonthsEnded March
31, |
|
Six Months Ended June
30, |
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
46,309 |
|
|
$ |
(182,868 |
) |
|
$ |
9,701 |
|
|
$ |
56,010 |
|
|
$ |
(248,643 |
) |
|
|
Adjusted
by: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
35,961 |
|
|
|
31,822 |
|
|
|
33,025 |
|
|
|
68,986 |
|
|
|
63,428 |
|
|
|
Net
losses (gains) on commodity derivative contracts |
|
|
(59,615 |
) |
|
|
58,750 |
|
|
|
(38,881 |
) |
|
|
(98,496 |
) |
|
|
35,993 |
|
|
|
Net
settlements received on commodity derivative contracts (1) |
|
|
7,177 |
|
|
|
34,720 |
|
|
|
(2,904 |
) |
|
|
4,273 |
|
|
|
87,878 |
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
50,851 |
|
|
|
43,342 |
|
|
|
33,206 |
|
|
|
84,057 |
|
|
|
90,308 |
|
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
— |
|
|
|
109,464 |
|
|
|
Stock-based compensation expense (non-cash) |
|
|
4,335 |
|
|
|
6,784 |
|
|
|
12,091 |
|
|
|
16,426 |
|
|
|
9,595 |
|
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
2,848 |
|
|
|
422 |
|
|
|
24,074 |
|
|
|
26,922 |
|
|
|
422 |
|
|
|
Income
tax benefit |
|
|
(255 |
) |
|
|
— |
|
|
|
(953 |
) |
|
|
(1,208 |
) |
|
|
— |
|
|
|
Gain on
sale of oil and natural gas properties |
|
|
(7,133 |
) |
|
|
— |
|
|
|
(5,143 |
) |
|
|
(12,276 |
) |
|
|
— |
|
|
|
Gain
(loss) on embedded derivatives |
|
|
437 |
|
|
|
— |
|
|
|
(685 |
) |
|
|
(248 |
) |
|
|
— |
|
|
|
(Gain)
Loss on investments |
|
|
8,058 |
|
|
|
— |
|
|
|
(8,864 |
) |
|
|
(806 |
) |
|
|
|
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,705 |
) |
|
|
(3,703 |
) |
|
|
(3,702 |
) |
|
|
(7,407 |
) |
|
|
(7,406 |
) |
|
|
Interest
income |
|
|
(150 |
) |
|
|
(158 |
) |
|
|
(357 |
) |
|
|
(507 |
) |
|
|
(483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
85,118 |
|
|
$ |
76,491 |
|
|
$ |
50,608 |
|
|
$ |
135,726 |
|
|
$ |
140,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums
associated with derivatives that settled during the respective
periods, which may include premiums accrued but not yet paid as of
the end of the quarter based on timing of cash settlement payments
with counterparties. |
|
|
|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP Reconciliation
– Adjusted Earnings (Loss)
We present Adjusted Earnings (Loss) attributable
to common stockholders (“Adjusted Earnings (Loss)”) in addition to
our reported net income (loss) in accordance with U.S. GAAP.
This information is provided because management believes
exclusion of the impact of the items included in our definition of
Adjusted Earnings (Loss) below will help investors compare results
between periods, identify operating trends that could otherwise be
masked by these items and highlight the impact that commodity price
volatility has on our results. Adjusted Earnings (Loss) is
not intended to represent cash flows for the period, nor is it
presented as a substitute for net income (loss), operating income
(loss), cash flows provided by (used in) operating activities or
any other measure of financial performance or liquidity presented
in accordance with U.S. GAAP. The following table
presents a reconciliation of our net income (loss) to Adjusted
Earnings (Loss) (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June
30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Net income (loss) |
|
$ |
46,309 |
|
|
$ |
(182,868 |
) |
|
$ |
56,010 |
|
|
$ |
(248,643 |
) |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends |
|
|
(3,987 |
) |
|
|
(3,987 |
) |
|
|
(7,974 |
) |
|
|
(7,974 |
) |
|
Preferred
unit dividends and distributions |
|
|
(10,949 |
) |
|
|
— |
|
|
|
(27,415 |
) |
|
|
— |
|
|
Preferred
unit amortization |
|
|
(5,282 |
) |
|
|
— |
|
|
|
(6,992 |
) |
|
|
— |
|
|
Net income (loss) attributable to common shares and
participating securities |
|
|
26,091 |
|
|
|
(186,855 |
) |
|
|
13,629 |
|
|
|
(256,617 |
) |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
losses (gains) on commodity derivatives contracts |
|
|
(59,615 |
) |
|
|
58,750 |
|
|
|
(98,496 |
) |
|
|
35,993 |
|
|
Net
settlements received on commodity derivative contracts (1) |
|
|
7,177 |
|
|
|
34,720 |
|
|
|
4,273 |
|
|
|
87,878 |
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
109,464 |
|
|
Stock-based compensation expense (non-cash) |
|
|
4,335 |
|
|
|
6,784 |
|
|
|
16,426 |
|
|
|
9,595 |
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
2,848 |
|
|
|
422 |
|
|
|
26,922 |
|
|
|
422 |
|
|
Gain on
sale of oil and natural gas properties |
|
|
(7,133 |
) |
|
|
— |
|
|
|
(12,276 |
) |
|
|
— |
|
|
(Gain)
Loss on embedded derivatives |
|
|
437 |
|
|
|
— |
|
|
|
(248 |
) |
|
|
— |
|
|
(Gain)
Loss on investments |
|
|
8,058 |
|
|
|
— |
|
|
|
(806 |
) |
|
|
— |
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,705 |
) |
|
|
(3,703 |
) |
|
|
(7,407 |
) |
|
|
(7,406 |
) |
|
Tax
impact of adjustments to net loss (2) |
|
|
(1,049 |
) |
|
|
— |
|
|
|
(1,578 |
) |
|
|
— |
|
|
Adjusted Loss |
|
|
(22,556 |
) |
|
|
(2,502 |
) |
|
|
(59,561 |
) |
|
|
(20,671 |
) |
|
Adjusted Loss allocable to participating
securities (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjusted Loss attributable to common
stockholders |
|
$ |
(22,556 |
) |
|
$ |
(2,502 |
) |
|
$ |
(59,561 |
) |
|
$ |
(20,671 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares used to calculate income (loss)
attributable to common stockholders - basic and diluted |
|
|
76,395 |
|
|
|
58,413 |
|
|
|
73,045 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums associated
with derivatives that settled during therespective periods, which
may include premiums accrued but not yet paid as of the end of the
quarterbased on timing of cash settlement payments with
counterparties. |
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|
|
|
|
|
|
(2) The tax impact is computed by utilizing the Company’s
effective tax rate on the adjustments toreconcile net income (loss)
to Adjusted Loss. |
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|
|
|
|
|
|
(3) The Company's restricted shares of common stock are
participating securities. |
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|
|
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|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP
Reconciliation – Adjusted Revenue
We present Adjusted Revenue in addition to our
reported Revenue in accordance with U.S. GAAP. The Company defines
Adjusted Revenue as follows: total revenues plus cash settled
derivatives. The Company believes Adjusted Revenue provides
investors with helpful information with respect to the performance
of the Company's operations and management uses Adjusted Revenue to
evaluate its ongoing operations and for internal planning and
forecasting purposes. See the table below which reconciles Adjusted
Revenue and total revenues.
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|
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|
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|
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Three Months Ended
June 30, |
|
Six Months Ended June
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016
|
Total Revenues |
|
$ |
175,704 |
|
$ |
110,968 |
|
$ |
309,546 |
|
$ |
190,784 |
Net
settlements received on commodity derivative contracts (1) |
|
|
7,177 |
|
|
34,720 |
|
|
4,273 |
|
|
87,878 |
Adjusted Revenue |
|
$ |
182,881 |
|
$ |
145,688 |
|
$ |
313,819 |
|
$ |
278,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums associated
with derivatives that settled during the respective periods, which
may include premiums accrued but not yetpaid as of the end of the
quarter based on timing of cash settlement payments with
counterparties. |
|
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