Sanchez Energy Provides Eagle Ford Shale Operations Update
HOUSTON, Jan. 17, 2012 /PRNewswire/ -- Sanchez Energy Corporation (SN), today provided a drilling, production, and reserves update on its activities in the Eagle Ford Shale trend in south Texas, where it has approximately 91,000 net acres, an estimated 750 net drilling locations (assuming 120 acre spacing) and a total resource potential based upon internal estimates of approximately 250 MMBOE all in the oil and liquids-rich windows of the play.
2011 Exit Production Rate and Operational Highlights
Sanchez Energy's estimated net production exit rate at December 31, 2011 was approximately 1,350 barrels of oil equivalent ("BOE") per day, of which approximately 80% was oil. At December 31, 2011, Sanchez Energy had nine producing wells with one additional well waiting on completion.
Significant recent operational highlights include:
- The Barnhart #5H, located in the company's Palmetto area in Gonzalez County, was drilled to a measured depth of 17,122 feet (lateral length of 5,991 feet), was fracked with 17 stages and placed on production December 2, 2011. Average production for the first 30 days was 1,318 BOE per day on a 14/64 restricted choke. The company has a 50% working interest in this well.
- The Barnhart #6H, also in the Palmetto area, was drilled to a measured depth of 17,719 feet (lateral length of 5,998 feet), was fracked with 18 stages and placed on production December 2, 2011. Average production for the first 30 days was 1,235 BOE per day on a 14/64 restricted choke. The company has a 50% working interest in this well.
Sanchez Energy also announced that its proved reserves increased by 118%, reaching 6.7 million barrels of oil equivalent (MMBOE) at December 31, 2011, up from 3.1 MMBOE at December 31, 2010. Oil constituted 84% of Sanchez Energy's proved reserves at December 31, 2011. Approximately 86% of the company's proved reserves were classified as proved undeveloped at December 31, 2011 as compared to 80% at December 31, 2010. In addition, the company's year-end 2011 reserve report identified 9.2 MMBOE of probable reserves and 9.4 MMBOE of possible reserves, for total 3P reserves of 25.3 MMBOE. The majority of Sanchez Energy's proved, probable and possible reserves are located within the company's 9,400 net acres in the Palmetto area located in Gonzales County, Texas. Sanchez Energy's estimated reserves, including the estimated probable and possible reserves, were prepared by its independent reservoir engineering firm, Ryder Scott & Company, L.P.
Furthermore, Sanchez Energy has internally estimated that it has approximately 750 net Eagle Ford drilling locations across its 91,000 net acreage position (assuming 120 acre well spacing) and a total resource potential of approximately 250 MMBOE.
Eagle Ford Shale
Sanchez Energy currently has a total of 91,000 net acres in the Eagle Ford shale trend in south Texas, with a specific focus on the volatile oil, black oil, and condensate windows of the trend. The company's acreage position is divided into three main project areas as follows:
- Palmetto: approximately 9,400 net acres (18,800 gross acres) in Gonzales County, Texas where the company has 50% working interest;
- Marquis: approximately 54,900 net (and gross) acres located primarily in Southeast Fayette and Northwest Lavaca Counties, Texas where the company has 100% working interest; and
- Maverick: approximately 26,400 net acres (33,100 gross acres), located in southern Zavala and Frio Counties, Texas where the company has an average 80% working interest
Tony Sanchez, III, Chairman and Chief Executive Officer of Sanchez Energy, said: "Sanchez Energy has large, contiguous acreage blocks with high working interests targeting the resource-rich Eagle Ford shale trend of south Texas. Along with this large acreage position, we believe that our team's history of operating, drilling and producing oil and natural gas in the heart of Texas is a competitive advantage. We also believe that our recently completed initial public offering positions us to rapidly build upon the production and reserve growth which we experienced in 2011. With no debt and the proceeds from our initial public offering, we have the financial strength and capital liquidity to aggressively convert our undeveloped reserve base and resource potential to production, proved reserves, and cash flow. We are excited about our most recent well results and look forward to building on these achievements as we enter a more continuous development program across all three of our project areas in 2012. We believe we have one of the strongest operational teams in the business to develop what is one of the best acreage positions of any public company of our size operating in the Eagle Ford shale trend."
Sanchez continued: "Our existing proved reserves are derived mainly from our 9,400 net acres in the Palmetto area which accounts for only about 10% of our total acreage in the Eagle Ford shale trend. We believe that there is significant resource potential across all three of our areas in the Eagle Ford shale trend. Our objective in establishing our 2012 drilling plan will be to demonstrate Sanchez Energy's ability to convert our drilling locations into proved reserves with demonstrated cash flow, and we look forward to providing guidance about our 2012 capital expenditure budget and drilling plans in due course. We expect to measure success based upon our ability to convert possible and probable reserves into proved reserves and production for the benefit of our stockholders."
Sanchez Energy Corporation is a Houston, Texas based growth-oriented independent exploration and production company currently focused on the prolific Eagle Ford shale trend of south Texas. The company has 91,000 net acres in the volatile oil, black oil, and gas condensate windows of the Eagle Ford shale. For more information about Sanchez Energy Corporation, please visit our website: www.sanchezenergycorp.com.
Forward Looking Statements
This press release contains 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. 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, the continued production of 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. 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. 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 use certain terms in this press release, such as total 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
Senior Vice President and Chief Financial Officer
Sanchez Energy Corporation
SOURCE Sanchez Energy Corporation