Casey Hoerth
Long only, long-term horizon, growth at reasonable price, dividend investing

Sanchez Energy: A Clear Wager On The Periphery

Last week Sanchez Energy (NYSE:SN) announced the acquisition of over 100,000 contiguous acres in the southwestern corner of the Eagle Ford Shale near Laredo. This land, called 'Catarina Ranch,' was acquired from Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B). With the Catarina acquisition, Sanchez doubled its acreage in the Eagle Ford.

This deal went for only $639 million, which is estimated at only $10.65 per barrel equivalent, according to Ryder-Scott. Apparently, Shell was eager to get rid of this acreage because it was unable to get much of a profit from it. According to Sanchez, Shell's internal rate of return was below 20% on the Catarina acreage. Still, the deal is immediately accretive to cash flow...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details