Sanchez Energy Provides Eagle Ford Shale Operations Update
HOUSTON, Oct. 29, 2012 /PRNewswire/ — Sanchez Energy Corporation (NYSE: SN), a fast growing independent oil and gas company with a 95,000 net acre position targeting the liquids-rich Eagle Ford Shale, Pearsall Shale, Austin Chalk, and Buda Limestone, today provided a drilling and production update on the Company’s third quarter production and operating activities.
Sanchez Energy’s estimated net production exit rate at September 30, 2012 was approximately 1,700 barrels of oil equivalent (“BOE”) per day, of which approximately 86% was oil. This rate represents a 42% increase over June 30, 2012 estimated net production exit rate of 1,200 BOE/d and an increase of over 350% from the same period a year ago. Production is expected to significantly increase during the fourth quarter as the Company executes the remainder of its 2012 drilling plan and adds seven wells already drilled and currently waiting on completion. Sanchez Energy reaffirms its 2012 production exit rate guidance range of 4,000 to 5,000 BOE/d.
Tony Sanchez, III, President and Chief Executive Officer, said, “We are executing our accelerated drilling program with two rigs currently drilling in each of our three major project areas after closing our $150 million convertible preferred equity offering. As we continue more development-type drilling in each project area and bring online wells currently waiting on completion, we expect to rapidly grow our production from its base of 1,700 BOE/d at the end of September. We are also testing tighter spacing in each of our areas, which may allow us to materially increase our 800 to 1,200 net identified potential drilling locations and our 250 to 380 million barrels of oil equivalent net resource potential based on 80 to 120 acre well spacing.”
Operations and Well Status Update
There are two rigs running in the Palmetto area, two rigs running in the Marquis area, and two rigs running in the Maverick area. As detailed in the following table, the Company has 13 wells in various stages of drilling, completion, or initial flow back following fracture stimulation:
Area Working Status Well Interest ---- -------- Ward E #1 Palmetto 50% Flowing Back Barnhart #14 Palmetto 50% Completing Barnhart #15 Palmetto 50% Completing Barnhart #18 Palmetto 50% Waiting on completion Barnhart A #1 Palmetto 50% Waiting on completion Barnhart #19 Palmetto 50% Drilling Barnhart A #2 Palmetto 50% Drilling Sante A #1H Marquis 100% Completing Prost B #1H Marquis 100% Waiting on completion Prost B #2H Marquis 100% Drilling Prost C #1H Marquis 100% Drilling Mark & Sandra #3H Maverick 100% Drilling Petro-Pards #3H Maverick 100% Drilling
Operational Highlights By Area:
Palmetto Area — Gonzalez County:
Sanchez Energy has nine producing wells, one well in initial flow back, two wells undergoing completion, two wells waiting on completion, and two wells currently drilling in its Palmetto area. Plans are to continuously employ two drilling rigs, which are expected to spud a total of 16 gross (8 net) wells in 2012 in this area.
- The Barnhart #9 well (W.I. 50%, 17 frack stages), in the central part of the Palmetto area, was drilled to a measured depth of 16,260 feet (lateral length of 5,813 feet) and placed on production August 11, 2012 at a 24-hour initial rate of 760 BOE/d.
- The Ward E #1 well (W.I. 50%, 17 frack stages), in the northern part of the Palmetto area, was drilled to a measured depth of 14,057 feet (lateral length of 4,307 feet) and is currently in the initial stages of its flow back process.
- The Barnhart #14 and #15 (both W.I. 50%) are currently being fracture stimulated. The Barnhart #14 was drilled with a lateral length of 7,176 feet and is expected to be fracked with 25 stages. The Barnhart #15 was drilled with a lateral length of 7,424 feet and is expected to be fracked with 26 stages. These wells are adjacent to the Barnhart #5 and #6, which had 24-hour initial production rates of 1,467 BOE/d and 1,420 BOE/d, respectively.
- The Barnhart #18 (W.I. 50%), in the southern portion of the Palmetto area, was drilled to a measured depth of 16,478 feet (lateral length of 4,965 feet) and is currently waiting on completion.
- The Barnhart #19 (W.I. 50%) is currently being drilled from the same pad location as the Barnhart #18. Both wells will be fracture stimulated once drilling operations on this pad are complete. The anticipated lateral length for this well is 5,400 feet.
- The Barnhart A #1 (W.I. 50%), also located in the southern portion of the Palmetto area was drilled to a measured depth of 16,788 feet (lateral length of 4,708 feet) and is currently waiting on completion.
- The Barnhart A #2 (W.I. 50%) is currently being drilled from the same pad location as the Barnhart A#1. Both wells will be fracture stimulated once drilling operations on this pad are complete. The anticipated lateral length for this well is 6,200 feet.
- The Company expects to drill a five-well pilot program (Barnhart #23, #24, #25, C #1, and C #4, all 50% W.I.) from a single pad to test 40-acre well spacing in its southern portion of the Palmetto area. Additionally, the Barnhart #23, #25, and C #1 will be part of a micro-seismic program to gather timely information on completions that can be applied across the Palmetto area. The micro-seismic program will provide subsurface information for seismic attribute analysis to better understand the reservoir and its production capabilities and profile.
Marquis Area — Fayette and Lavaca Counties:
Sanchez Energy has two producing wells, one well undergoing completion, one well waiting on completion, and two wells currently drilling in its Marquis area. The Company expects to spud nine gross and net wells in 2012, including eight wells planned in the Prost area of Marquis, where the Company estimates it has up to 32 development locations. A rig will drill continuously in the Prost area while 3-D seismic of the rest of Marquis is acquired and interpreted during the first half of 2013.
- The Sante A #1H (W.I. 100%), the Company’s third well in the Marquis area, was drilled to a measured depth of 18,168 feet (lateral length of 6,020 feet) and is currently undergoing completion.
- The Prost B #1H was drilled to a measured depth of 16,905 feet (lateral length of 5,689 feet) and is waiting on completion.
- The Prost B #2H and the Prost C #1H have both been recently spud and will be followed by the Prost B #3H and Prost C #2H. A third rig will move into to spud the Prost C #8H by year-end 2012. These wells are offsets to the Prost #1H and #2H, which had 24-hour initial production rates of 1,120 BOE/d and 1,369 BOE/d, respectively.
Maverick Area — Zavala and Frio Counties:
Sanchez Energy has nine producing wells and two wells currently drilling in its Maverick area. The Company expects to spud a total of up to 10 gross and net wells in 2012.
- The Mark & Sandra #3H and the Petro-Pards #3H have both been recently spud and will be followed by the Petro-Pards #4H. These wells are offsets to the Mark & Sandra #2H, which had a 24-hour initial production rate of 931 BOE/d (~97% oil).
Expected Remaining 2012 Drilling Schedule:
Sanchez Energy expects to spud up to 12 wells between November and year-end 2012. The table below depicts the Company’s expected remaining 2012 drilling schedule:
Well Area Working Anticipated Spud Date Interest --- -------- Barnhart #23 Palmetto 50% November 2012 Barnhart C #2 Palmetto 50% November 2012 Barnhart C #3 Palmetto 50% November 2012 Barnhart #25 Palmetto 50% December 2012 Barnhart C #1 Palmetto 50% December 2012 Barnhart #30 Palmetto 50% December 2012 Prost C #2H Marquis 100% November 2012 Prost C #8H Marquis 100% November 2012 Prost B #3H Marquis 100% November 2012 Petro-Pards #4H Maverick 100% November 2012 Soliz #1V Maverick 100% November 2012 Woodbury #1V Maverick 100% December 2012
About Sanchez Energy Corporation
Sanchez Energy Corporation is a Houston, TX based growth oriented independent exploration and production company currently focused on the prolific Eagle Ford Shale trend of south Texas. The company has 95,000 net acres in the volatile oil, black oil, and gas condensate windows of the Eagle Ford. 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 and other factors described in Sanchez Energy’s Annual Report for the fiscal year ended December 31, 2011 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”) filings. 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