HOUSTON, July 23, 2014 /PRNewswire/ -- Sanchez Energy
Corporation (NYSE: SN) ("Sanchez Energy" or the "Company") today
provided an update on its second quarter 2014 production and
operations.
Summary Highlights
- Estimated second quarter 2014 production of approximately 1,859
MBOE (20,427 BOE/D), an increase of 164% compared to the same
period a year ago and above the midpoint of the production guidance
range of 19,000 to 21,000 BOE/D
- Reported production volumes consisted of 73% oil, 14% NGLs, and
13% natural gas
- Production during the month of July has averaged approximately
36,000 BOE/D with 43 gross wells in various stages of
completion
- The Company reiterates third quarter 2014 production guidance
of 37,000 to 41,000 BOE/D
- Initial six wells in the Five Mile Creek area of Marquis came
online with initial 30 day average rates ranging from approximately
450 to 700 BOE/D, in line with expectations and de-risking the
10,000 net acre position with an average completed well cost of
$7.0 million
- Closed the Catarina
acquisition on June 30, 2014 and full
scale development is underway with one rig currently drilling and a
dedicated frac spread undergoing completion operations on the
initial set of 22 wells drilled, cased, and awaiting
completion
Tony Sanchez, III, President and
Chief Executive Officer of Sanchez Energy, said: "The second
quarter of 2014 was a transformational quarter for the Company as
we announced and closed the Catarina acquisition, enabling the Company to
significantly increase its reserves and production. Our inventory
of potential drilling locations now stands at almost 3,000. We
permanently financed the Catarina
acquisition and have fully funded our capital plans through 2015
after issuing $850 million of senior
notes and 5 million shares of common stock."
Sanchez continued: "Integration and planning for the full scale
development of the Catarina assets
is already underway with one rig currently drilling on the western
side of Catarina and a second rig
expected to be deployed by the end of August in the same area. A
third rig is scheduled to start Lower Eagle Ford appraisal drilling
on the eastern side of the asset later in the third quarter of this
year. With the scale attained from the Catarina operations, we have contracted a full
time, dedicated frac spread that has recently begun completing the
first set of 22 wells which have already been drilled, cased, and
are awaiting completion on this asset. This dedicated frac spread,
along with the direct sourcing of chemicals and sand, represents
the next level of costs savings which we expect will drive
comparable completion costs down by another 20% to 30%."
Sanchez concluded: "We are continuing full scale development
across all of our Eagle Ford areas and have de-risked the 10,000
net acre Five Mile Creek area of Marquis by bringing online six
wells with initial 30 day average production rates of approximately
450 to 700 BOE/D which, along with continued appraisal work in the
rest of Marquis and Cotulla, are
steadily adding de-risked inventory. We are currently drilling a
Buda appraisal well in the Five
Mile Creek area and are preparing to spud two Upper Eagle Ford
wells in the Sante area."
Production Overview
Estimated total production for the second quarter of 2014 was
approximately 1,859 MBOE (20,427 BOE/D), within our guidance range
of 19,000 to 21,000 BOE/D. Our quarterly average production rate
would have been approximately 20,600 BOE/D if we would not have
been impacted by the unexpected third party pipeline downtime in
our Cotulla and Wycross areas.
Crude oil represented 73% of the total production stream, NGLs
represented 14%, and natural gas represented 13%. Going forward, we
anticipate production growth to continue as a result of our ongoing
Eagle Ford development and appraisal work as well as the addition
of the Catarina asset which will
impact third quarter volumes. Across all assets, we have 43 gross
wells drilled and waiting on completion and 7 rigs running,
resulting in a steady backlog of wells that will contribute to our
continued production growth and reserve additions. We reiterate our
third quarter 2014 production guidance range of 37,000 to 41,000
BOE/D.
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Three Months Ended
June 30,
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2014
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2013
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%
Change
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Total Production
Volumes
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Oil
(MBbls)
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1,356
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541
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151%
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Natural Gas
(MMcf)
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1,445
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470
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208%
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NGLs
(MBbls)
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262
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84
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213%
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Total Production
Volumes (MBOE)
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1,859
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703
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164%
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Average Daily
Production Volumes
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Oil
(Bbls/d)
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14,901
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5,946
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151%
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Natural Gas
(Mcf/d)
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15,879
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5,162
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208%
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NGLs
(Bbls/d)
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2,879
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920
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213%
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Total Production
Volumes (BOE/D)
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20,427
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7,726
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164%
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Eagle Ford Operations Update
The Company continues to realize sustained costs savings and
drilling efficiencies as it currently has 6 gross (5 operated and 1
non-operated) rigs running across its Eagle Ford positions. In
addition to the rig currently running in Catarina, we have contracted a new, modern rig
which will be deployed in Catarina
by the end of August. Results of our step-out tests in the Marquis
and Cotulla areas have now
confirmed additional high return inventory in these areas. Six new
wells in the Five Mile Creek area of Marquis were brought online
with initial 30 day average production rates of approximately 450
to 700 BOE/D at an average cost of $7.0
million, de-risking the 10,000 net acre position. We are
also drilling our first Buda well,
the Crabb Ranch A #2, targeting the Buda formation across the Five Mile Creek area
and are now in final preparation for the drilling of two Upper
Eagle Ford appraisal wells in the third quarter in the Sante area,
with plans for additional Upper Eagle Ford appraisal wells in
Fayette and Lavaca Counties in the second half of the
year. In the Wycross area of Cotulla, we completed four wells in an
appraisal area close to the salt dome designed to expand the
prospective area for future locations. Those wells were brought
online during the second quarter with average initial 30 day
production rates of approximately 500 BOE/D, confirming that we can
expand our planned activity in Wycross at favorable rates of return
in an area originally thought to be too complicated and risky
around the salt dome. In the Talbutt area of northern Cotulla, we successfully drilled an
approximately 7,000' lateral and achieved initial 30 day rates over
600 BOE/D, which is a significant improvement over the 350 BOE/D
results from initial wells drilled prior to our May 2013 acquisition. We are currently completing
four Wycross wells with an additional five Wycross wells waiting on
completion.
The extensional drilling we have undertaken since the start of
the year has significantly increased our available inventory in the
Lower Eagle Ford. Success appraising the Upper Eagle Ford,
Buda, and Austin Chalk would significantly expand our
resource base, increasing our total potential locations to almost
3,000. During the second half of the year, we will also begin the
process of de-risking the Lower Eagle Ford on over 60,000 untested
and prospective acres in Catarina.
Tuscaloosa Marine Shale Operations Update
Our first TMS well, the Dry Fork East #2H, in Wilkinson County, Mississippi was spud in late
May and reached total depth earlier this month within the planned
time-frame. During clean out prior to running production casing,
the drill string parted due to defects in the drill pipe. We are
now in the process of sidetracking the lateral portion of the well
and expect to have casing run within two weeks. The lateral
exhibited strong hydrocarbon shows during drilling, confirming our
expectation of a good well. The TMS rig will run continuously
throughout the year, allowing us to spud up to four gross operated
wells in addition to participating in 10 – 15 gross non-operated
wells. We increased our TMS net acreage position during the second
quarter from approximately 40,000 net acres to 58,000 net acres,
largely through bolt on acreage positions. We expect other TMS
operators to continue ramping up their activity and further de-risk
various portions of the play.
As detailed in the table below, Sanchez Energy currently has 7
gross rigs (6 operated and 1 non-operated) running across its Eagle
Ford and TMS areas with 413 gross producing wells and 43 gross
wells in various stages of completion.
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Gross
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Gross
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Gross
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Net
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Wells Waiting
/
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Project
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Producing
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Rigs
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Rigs
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Undergoing
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Area
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Wells
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Running
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Running
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Completion
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Catarina
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176
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1
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1
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22
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Marquis
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59
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4
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3
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11
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Cotulla
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114
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1
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1
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10
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Palmetto
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61
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-
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-
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-
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TMS /
Other
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3
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1
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1
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-
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Total
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413
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7
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6
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43
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About Sanchez Energy Corporation
Sanchez Energy Corporation is an independent exploration and
production company focused on the acquisition and development of
unconventional resources in the onshore U.S. Gulf Coast with a
current focus on the Eagle Ford Shale where we have assembled
approximately 224,000 net acres. The Company also has approximately
58,000 net acres targeting the Tuscaloosa Marine Shale. Sanchez
Energy plans to hold its second quarter 2014 earnings conference
call on Thursday, August 7, 2014 at
2:00 p.m. EDT (1:00 p.m. CDT). 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 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, including statements relating to the anticipated
benefits of our acquisitions. 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 failure of acquired assets to produce
as anticipated, failure to successfully integrate acquired assets,
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 and continue growth and other factors
described in Sanchez Energy's Annual Report for the fiscal year
ended December 31, 2013 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 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. 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.
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:
Michael G. Long
Executive Vice President and Chief Financial Officer
Sanchez Energy Corporation
(713) 783-8000
Gleeson Van Riet
SVP, Capital Markets & Investor Relations
Sanchez Energy Corporation
(713) 783-8000
SOURCE Sanchez Energy Corporation