HOUSTON, Dec. 10, 2014 /PRNewswire/ -- Sanchez Energy Corporation (NYSE: SN) ("Sanchez Energy" or the "Company") today provided an interim financial and operations update.
Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "Given the recent downward movement in oil prices and current equity market environment for the energy industry, it is important to provide an update on the Company's financial position and current operations."
- As reported on September 30, 2014, SN's net debt to pro forma LTM EBITDA was 1.8x which is significantly lower than its most restrictive covenant of 4.0x net debt to LTM EBITDA under its revolving credit facility which is currently not drawn upon. SN has an attractive maturity profile with the recently increased revolver maturing in 2019 and its senior notes, which carry no maintenance covenants, beginning to mature in 2021.
- As of December 7, 2014, liquidity of $1,180 million, consisting of $530 million in cash in addition to $650 million of undrawn, approved revolving credit borrowing base with a current commitment elected by the Company of $300 million.
- Current record production of approximately 45,000 barrels of oil equivalent per day ("BOE/D")
- In Catarina, early well results have exceeded initial expectations. The Company has recently completed 3 Lower Eagle Ford ("LEF") wells with initial 24-hour production rates ranging from 1,215 BOE/D to 1,319 BOE/D and an average rate of 1,280 BOE/D.
- The first 9 Upper Eagle Ford ("UEF") wells in Catarina have achieved strong 30-day production rates averaging 1,067 BOE/D, exceeding the Company's initial expectations for the Upper Eagle Ford.
- The Company's most recent well in the TMS, the St. Davis #1H (approximately 49% WI), commenced flowback and achieved a peak 24-hour production rate of 1,143 BOE/D per day and a 30-day production rate of approximately 920 BOED (91% liquids).
Sanchez, lll continued, "The Company has planned for and is poised to rapidly adapt to a changing commodity price environment. As of December 7, 2014, SN's liquidity consists of $530 million in cash and an undrawn revolver with a $300 million elected commitment from a $650 million borrowing base. SN has strong financial flexibility and the option to enhance its liquidity if needed by electing the full $650 million borrowing base, which would increase available liquidity to over $1.1 billion. SN expects to fully fund its 2015 capital program through cash and cash equivalents on hand and cash flow from operations without drawing on the Company's revolving credit facility.
As reported on September 30, 2014, SN's net debt to pro forma LTM EBITDA was 1.8x which is significantly lower than its most restrictive covenant of 4.0x net debt to LTM EBITDA under its revolving credit facility which is currently not drawn upon. SN has an attractive maturity profile with the recently increased revolver maturing in 2019 and its senior notes, which carry no maintenance covenants, beginning to mature in 2021.
SN's substantial amount of acreage which is held by production and long-term leases allow for significant flexibility with respect to a majority of its capital spending. In this regard, 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 continue to maximize its flexibility.
Current production is at a record level of approximately 45,000 BOE/D with an additional eight wells expected to be brought online prior to year-end.
SN has completed the first three Lower Eagle Ford wells in Catarina, two of which were drilled by SN and one drilled by the previous operator. The three Lower Eagle Ford wells had initial 24-hour production rates ranging from 1,215 BOE/D to 1,319 BOE/D with an average production rate of 1,280 BOE/D, 65% of which was liquids. While these wells are still cleaning up under a more conservative choke strategy, the current pressures and production rates are tracking the 600-700 MBOE projections SN initially provided for the Lower Eagle Ford in Catarina.
The previously reported Upper Eagle Ford wells in Catarina have continued to exhibit strong rates and have achieved 30-day production rates averaging 1,067 BOE/D. Details on individual wells are noted in the table below.
Alongside the encouraging production results from both the Lower Eagle Ford and Upper Eagle Ford in western Catarina, SN has successfully drilled a northwestern appraisal well which logged and cored 270 feet of the Upper and Lower Eagle Ford intervals. The pilot well wireline log evaluation confirmed a thick LEF target zone exhibiting high TOC and porosity as well as two zones of interest in the UEF. These results support our initial belief that both the LEF and UEF can simultaneously be developed throughout western Catarina.
Activity in the eastern half of Catarina remains focused on the appraisal of the LEF section. On the first operated pad, SN is zipper frac completing the first two laterals while the rig is currently drilling two laterals on the second appraisal pad.
In the TMS, the St. Davis #1H has commenced flowback and achieved a peak 24-hour production rate of 1,143 BOE/D and a 30-day production rate of approximately 920 BOE/D (91% liquids). The normalized initial production rates seen on the well are among the best rates observed in the TMS at 204 barrels of oil per thousand lateral feet. The well was drilled with an approximate 5,600 foot lateral above the "rubble zone" and was fracked with 25 stages. It is currently producing on an 18/64 choke.
Activity in the 50/50 TMS joint venture between privately held Sanchez Resources and SN includes the completion of the Morris #2H well in Wilkinson County, Mississippi, which was drilled with a 6,450 foot lateral in the upper TMS and is expected to commence production in late December. The joint venture currently holds in excess of 110,000 net acres in the core of the play.
The success of the St. Davis well is in part due to the placement of the lateral above the TMS "rubble zone" which SN believes, due to sand and silt deposition, provides for shallower declines and a higher b-factor relative to the lower section targeted TMS wells. SN remains positive on the long-term potential of the TMS, particularly given expected declining costs and high netbacks due to the high percentage of oil in the production stream which is sold based on LLS pricing."
24 Hour IP
St. Davis #1H
*30-day IP not yet available where indicated "n/a"
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 in South Texas, where it has assembled approximately 226,000 net acres, and the Tuscaloosa Marine Shale. 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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