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.
- 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."
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.
Three Months Ended June 30,
Total Production Volumes
Natural Gas (MMcf)
Total Production Volumes (MBOE)
Average Daily Production Volumes
Natural Gas (Mcf/d)
Total Production Volumes (BOE/D)
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.
Wells Waiting /
TMS / Other
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.
Michael G. Long
Executive Vice President and Chief Financial Officer
Sanchez Energy Corporation
Gleeson Van Riet
SVP, Capital Markets & Investor Relations
Sanchez Energy Corporation
SOURCE Sanchez Energy Corporation