HOUSTON, Oct. 23, 2014 /PRNewswire/ -- Sanchez Energy Corporation (NYSE: SN) ("Sanchez Energy" or the "Company") today provided an update on its third quarter 2014 production and operations.
Highlights For Third Quarter 2014 Operations
- Estimated third quarter 2014 production of approximately 3,552 MBOE (38,613 BOE/D), an increase of 91% over the second quarter 2014 and an increase of 228% compared to the same period a year ago, above the midpoint of the Company's production guidance range of 36,000 to 40,000 BOE/D
- Reported production volumes consisted of 47% oil, 27% NGLs, and 26% natural gas
- 9 Catarina Upper Eagle Ford wells that were drilled by the previous operator have been completed and brought online with initial 24 hour production rates ranging from 973 BOE/D to 2,117 BOE/D with an average production rate of 1,402 BOE/D
- 50 gross wells are in various stages of completion
- Internally estimated proved reserves have increased to over 125 MMBOE at September 30, 2014, an increase of approximately 8 MMBOE compared to mid-year 2014, with 46% classified as proved developed
- Liquidity of approximately $900 million as of September 30, 2014, consisting of $600 million in cash and cash equivalents and a $362.5 million unused borrowing base (with a $300 million elected commitment amount) under its revolving credit facility
Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "The focus of SN's operational efforts this quarter has been the assumption of operations at its newly acquired asset, Catarina. Two rigs have been deployed on the western part of the asset drilling development wells targeting the Lower Eagle Ford while a third rig has begun appraisal drilling on the eastern section of the asset, also targeting the Lower Eagle Ford. SN has completed the first group of wells that were drilled by the previous operator in the Upper Eagle Ford, and they are now online and flowing to sales with very encouraging results. These 9 Upper Eagle Ford wells had initial 24 hour average production rates ranging from 973 BOE/D to 2,117 BOE/D with average production rates of 1,402 BOE/D, 64% of which was liquids. It is important to note that these wells have thus far significantly outperformed the Company's expectations and are tracking type curves in excess of preliminary estimates provided for both the Lower and Upper Eagle Ford. The wells were completed using an updated completion design which utilizes tighter frac cluster spacing with higher proppant concentrations and a different fluid delivery system. SN is encouraged by their strong initial performance and believes that this will add a significant number of high-rate of return tier-1 drilling locations targeting the Upper Eagle Ford. Specific to Catarina, initial estimates indicate the potential for 650 Upper Eagle Ford locations based on 50-acre spacing in areas of similar thickness and porosity as the initial 9 wells completed to date. Adding that to the previously identified 600 Lower Eagle Ford locations at Catarina, the Company expects an inventory of at least 1,250 high rate-of-return drilling locations, which is approximately 20 years of drilling at its current rig count. A summary of the 9 Upper Eagle Ford well results is shown below:
24 Hour IP
Addressing the recent downward movement in oil prices, Sanchez noted that "the Company has planned for and is poised to rapidly adapt to a changing commodity price environment. As of September 30, 2014, SN's liquidity was approximately $900 million, consisting of $600 million in cash and an undrawn revolver with a $300 million elected commitment from a $362.5 million borrowing base. Current liquidity combined with future operating cash flow is expected to fully fund the Company's anticipated 2015 capital program. SN's substantial amount of HBP acreage and long-term leases allow it to treat the majority of capital spending as discretionary. The Company's only significant capital commitment is Catarina's continuous drilling provision of 50 wells per year, which SN believes can be met with 2 to 2.5 rigs per year. Since inception, SN has intentionally avoided long-term contracts and commitments for goods and services in order to maximize its flexibility."
Estimated total production for the third quarter 2014 was approximately 3,552 MBOE (38,613 BOE/D), above the midpoint of SN's guidance range of 36,000 to 40,000 BOE/D. Crude oil represented 47% of the total production stream, NGLs represented 27%, and natural gas represented 26%. Across all assets, SN has 10 gross rigs running and 50 gross wells drilled and waiting on completion.
Three Months Ended
Three Months Ended September 30,
Total Production Volumes
Natural Gas (MMcf)
Total Production Volumes (MBOE)
Average Daily Production Volumes
Natural Gas (Mcf/d)
Total Production Volumes (BOE/D)
Sanchez Energy announced that internally estimated proved reserves increased to over 125 MMBOE at September 30, 2014, up more than 8 MMBOE from approximately 117 MMBOE at June 30, 2014. Crude oil constituted 47% (72% liquids) of Sanchez Energy's internally estimated proved reserves, and 54% of the Company's proved reserves were classified as proved undeveloped compared to 56% at June 30, 2014.
Eagle Ford Operations Update
There remains a backlog of 21 uncompleted wells on Catarina, including 14 Upper Eagle Ford wells and 7 Lower Eagle Ford wells that will be completed between now and year-end using the same completion designs that helped generate the strong performance seen in the first 9 wells discussed above. The new Catarina wells have come on at considerably higher rates and pressures than anticipated and are creating production and facility bottlenecks that affect the older lower pressure wells. In addition, there have been periodic changes in the pressures at Catarina's gas sales lines that have created operating issues at its central processing facilities, all of which have slowed the rate of growth in total production at Catarina. SN is actively addressing this issue by adding flexibility to the existing facilities, but the temporary production bottlenecks and shut-ins are anticipated to shift some production from the fourth quarter 2014 into early 2015. Additionally, SN has been drilling longer laterals in Catarina with more stages and proppant per stage than originally designed, leading to a longer spud to first production time but resulting in higher returns and EURs. As a result of the deferred production and longer spud to first production time, SN is revising its fourth quarter 2014 production to 40,000 – 44,000 BOE/D from 48,000 – 50,000 BOE/D. The Company's preliminary 2015 production guidance range is unaffected by this deferral of production.
As detailed in the table below, Sanchez Energy currently has 10 gross rigs (8 operated and 2 non-operated) running across its Eagle Ford and TMS areas with 447 gross producing wells and 50 gross wells in various stages of completion.
Wells Waiting /
TMS / Other
Tuscaloosa Marine Shale Operations Update
The Dry Forks East #2 was successfully sidetracked to a lateral length of 5,033' after encountering mechanical issues, has been completed, and is currently producing to facilities. The Dry Forks East #2 achieved a 24 hour IP of 712 BOE/D, 89% oil, accounting for the high, 1,500 MMBtu, natural gas stream based upon an industry standard of 6:1. The St. Davis #1, SN's second operated TMS well in Amite, County, Mississippi, has reached a total depth of 17,940' with a lateral length of 5,600' and is currently being completed. Both of these wells targeted the area above the rubble zone in order to avoid fracking into wet sands mapped immediately below the TMS. The Company currently expects the rig in the TMS to drill continuously through the remainder of this year as well as through 2015.
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 it has assembled approximately 226,000 net acres. The Company also has approximately 61,000 net acres targeting the Tuscaloosa Marine Shale. Sanchez Energy plans to hold its third quarter 2014 earnings conference call on Wednesday, November 5, 2014 at 2:00 p.m. EST (1:00 p.m. CST). For more information about Sanchez Energy Corporation, please visit its 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 related to our production and well results. 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. These risks and uncertainties include, but are not limited to, the extent to which Sanchez Energy is successful in its efforts to acquire or discover additional reserves, its ability 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, the extent and effect of any of its hedging activities, its success marketing and selling produced oil and gas, estimates made in evaluating reserves, competition, general economic conditions, the future availability and cost of employees and other personnel, facilities, equipment, materials and services, its ability to manage and continue growth and other factors as further described in Sanchez Energy's Annual Report for the most recently completed fiscal year ended December 31 and any updates to those risk factors set forth in Sanchez Energy's Quarterly Reports on Form 10-Q. No representation or warranty is made as to future performance. 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
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