Sanchez Energy Closes on Eagle Ford Acquisitions
Sanchez Production Parters (SPP) and Sanchez Energy Corp have closed on two deals involving Eagle Ford assets valued at over $600 million.
Related: Sanchez Reports Excellent Third Quarter
In the first deal, SPP acquired a 50% interest in Carnero Processing, LLC from Sanchez Energy Corporation for $80 million, including $55.5 million in cash and assuming $24.5 million for capital commitments to Carnero Processing. Carnero Processing is currently constructing a cryogenic natural gas processing plant in La Salle County. The “Raptor Plant” will be connected to Sanchez Energy’s Catarina via the Carnero Gathering System.
The company also closed on its acquisition of producing oil and natural gas assets, paying $25.6 million in cash to Sanchez Energy at closing.
“Having now closed the two transactions announced in October 2016, we have successfully executed and financed transactions with Sanchez Energy for total value of nearly $600 million,” said Gerry Willinger, Chief Executive Officer of the general partner of SPP. “In the process, we have demonstrated how our strategic relationship with Sanchez Energy can be leveraged to enable each company to better optimize its respective strategies, capital resources, and financial targets. We are excited to be further aligned with Sanchez Energy and its plans for development in South Texas, and look forward to capitalizing on additional opportunities to grow alongside this leading Eagle Ford operator over time.”
These transactions are expected to add an average of 700 Boe/d of production in 2017. The estimated proved reserves from the producing wellbores is approximately 2,136 MBoe, of which 73% is oil, 13% natural gas liquids, and 14% natural gas.
Sanchez Energy reported and excellent third quarter for 2016. The company is currently running three rigs in the Eagle Ford, with plans to drop to two rigs during the fourth quarter. Executives estimate the company has over 350 Upper Eagle Ford locations with returns in excess of 50%