Sanchez Energy has agreed to purchase approximately 3,600 net acres with 12 Eagle Ford producing wells in McMullen County for $220 million from privately held Rock Oil. The assets have estimated proved reserves of 11 million boe (81% oil, 8% NGLs, 11% gas) and were producing 2,000 boe/d at the time of the announcement. Development is expected at 60-acre spacing, with potential for 40-acre spacing.

The deal adds a new primary development area for Sanchez named "Wycross" in McMullen County. The acreage is not shown on the map, but will be located just to the southeast of the "Cotulla-Maverick" area. A rig will be moved into the area in late 2013 and will begin a continuous development program.

Other highlights include:

• Company-wide production grows to 13,500 boe/d
• Fourth quarter production guidance is increased from 13,000-15,000 boe/d to 15,000-17,000 boe/d
• Updated 2013 plans call for the drilling of 56 net wells and completion of 40 net wells for $420 million
• Total 2013 budget including expenses for facilities, leasing, and G&G is $470 million
• Plans for 2014 call for spending of $660 million to drill 76 net wells and complete 79 net wells
• Total 2014 budget including expenses for facilities, leasing, and G&G is $700 million
• 94% of spending in 2014 will target the Eagle Ford

Sanchez has assembled close to 145,000 net acres in the Eagle Ford and estimates its drilling inventory in the play is near 1,750 wells.

Sanchez will fund the acquisition and portions of its 2013 and 2014 capital budgets with the issuance of 8,000,000 shares of common stock and the private placement of $150 million in senior notes. The two offerings are expected to raise more than $300 million.

From a production perspective, Sanchez paid $110,000/flowing boe and from an acreage perspective the company paid a little more than $61,000 per acre. In reality, there was a separate allocation of value to the undeveloped acreage and to production.

Read the full press release at sanchezenergycorp.com