Sanchez Energy Reports Huge Losses

Sanchez Energy Q2 Report
Sanchez Energy Q2 Report

Sanchez Energy Corp. reported second quarter losses of half a billion dollars and is looking to its Eagle Ford operations to turn things around.

Related: Sanchez Energy Reports Strong Q1

Sanchez is continuing to position itself to withstand a prolonged low commodity pricing by taking a conservative approach to their planning; cost reductions, improve drilling efficiencies and strong well performance

In their Q2 earning call, they reported a total production of 4,907 thousand barrels of oil equivalent ("MBOE"), a 164% increase over the second quarter 2014 he company announced it has reduced 2015 capital spending estimate by $50 million or approximately 8% and now plan to spend between $550 million and $600 million.

We have positioned the company to both thrive and grow in a $40 to $50 oil price environment. Improvement in our cost structure and production performance has allowed us to do more with less.
— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

The Company's Eagle Ford development plan remains primarily focused on Catarina, where the Company plans to average four gross (3.5 net) rigs over the course of 2015. Other Eagle Ford highlights include:

  • We are currently ahead of schedule on our development program in the Eagle Ford. In Catarina we exceeded our first annual 50-well drilling commitment by drilling 68 wells, which allows us to bank 18 wells toward the next annual commitment period that ends in June of 2016.
  • In the process of completing our first pad in North Western Catarina,
  • Bought 35 gross wells online during the quarter
  • Currently has 565 gross producing wells with 32 gross wells in various stages of completion


Sanchez Energy Strong in the Eagle Ford

Sanchez Q2 Report
Sanchez Q2 Report

Sanchez Energy, focusing its development in the Eagle Ford, stands out in the midst of a sea of suffering oil & gas producers.

The crude price slump has taken its toll on a number of producers who have not been able to adjust enough to stay afloat. Six producers have filed bankruptcy since the first the year; American Eagle Energy, Quicksilver Resources, BPZ Resources, Sabine Oil & Gas, WBH Energy and Walter Energy. Analysts are warning that this is just the tip of the iceberg and many are forecasting bankruptcies will increase later in the year.

Related: Sabine Files Chapter 11

In the midst of the uncertainty, Sanchez is having a really good year. A few weeks after releasing a strong Q1 report, the company’s second quarter earnings show that current volumes are the highest in the company’s history.

During the second quarter 2015, we had success on a number of fronts.Estimated production for the second quarter 2015 averaged approximately 53,920 BOE/D. As a result of operational efficiencies, we are now able to drill and complete wells at a faster pace and at lower costs. Our innovative procurement strategy and continued focus on cost reduction has enabled us to drive capital costs down and deliver average well costs under $4.5 million per well in Catarina during the second quarter.
— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

Q2 Highlights:

  • Record production of 4,907 thousand barrels of oil equivalent ("MBOE") during the second quarter 2015 for average production of 53,920 barrels of oil equivalent per day ("BOE/D")
  • Shorter drilling times and strong production from recent wells put on production at Catarina.
  • Current production is approximately 53,000 BOE/D.
  • The two most recent two-well pads at South-Central Catarina have averaged 24-hour initial production rates between 1,400 and 1,800 BOE/D
  • Increasing its full year 2015 production range to 44,000-48,000 BOE/D.
  • 32 wells required to be drilled before June 30, 2016
  • Decreased well costs from $6.5 million per well to below $4.5 million

In May, Sanchez announced that Gleeson Van Riet has been named Senior Vice President and Chief Financial Officer of the company. Van Riet is replacing Mike Long, who retired on April 30, 2015.


Sanchez Energy Reports Strong Q1

Sanchez Energy Released 2015 Q1
Sanchez Energy Released 2015 Q1

Sanchez Energy announced a strong start to 2015 during it's conference call last week, reporting they have reached new milestones for production and cost structures.

For the first quarter of 2015, Sanchez saw record production averaging 45,217 barrels of oil equivalent per day during the quarter and reported they are currently producing approximately 50,000 barrels per day. Completed well costs in all of regions of the company's Eagle Ford operations (Catarina, Marquis and Cotulla/Wycross) are below $5.0 million, and are anywhere from 30% to 40% below costs from Q4’14.

A huge factor in Sanchez growth and success in the Eagle Ford is due to their acquisition of 106,000 acres in Catarina, TX from Dutch Shell last year. Catarina accounted for 60% of the company’s production in Q1’15.

Read more: Sanchez Nearly Doubles Eagle Ford Acreage in $639 Million Deal

At the time of our IPO in December of 2011, we had production of approximately 600 barrels of oil equivalent per day. Since that time, through a combination of organic growth and strategic acquisitions, we have now grown production to approximately 50,000 barrels of oil equivalent per day and at our current pace, have well over a decade of high return drilling opportunities in our inventory.
— Christopher D. Heinson - Chief Operating Officer and Senior Vice Presiden

Q1 Eagle Ford Highlights

  • Record production averaging approximately 45,217 BOE/D
  • Executed and closed the sale of escalating working interests in 59 producing wellbores in the non-operated Palmetto Field for aggregate consideration of approximately $85 million
  • Catarina: Exceeded our first annual 50 well drilling commitment, by drilling 54 wells.
  • Catarina: successfully appraised three distinct and productive benches
  • Well costs trending down across assets, and we are now drilling and completing wells at Catarina,Cotulla, and Marquis at a cost that is approximately 30 to 40% below well costs realized in the fourth quarter 2014, with drilling and completion costs at Catarina now trending below $4.5 million.


Sanchez Energy CFO Steps Down

Sanchez CFO Steps Down
Sanchez CFO Steps Down

Michael G. Long, the Executive Vice President and CFO of Sanchez Energy plans to step down from his position within the next 45 days.

This news came one week after the company reported record revenues and production for 2014. After Monday’s announcement, Sanchez stock fell -7.05%. 

Related: Sanchez Energy Ends Year Strong

Long joined Sanchez in 2008 and helped take the company public in 2011.

Mike has contributed significantly to the formation, management and growth of Sanchez Energy since its IPO in 2011. Today the company is well positioned to continue its track record of success with strong liquidity, a solid capital structure and an asset base with an attractive and deep inventory. Mike has had a long and successful career dedicated to the energy industry, and we wish him and his family all the best as he plans this next phase of his life.
— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

While the company searches for a permanent replacement, Gleeson Van Riet will serve as interim co-CFO, effective immediately. Van Riet is the senior vice president of capital markets and investor relations

Sanchez Energy is heavily invested in the Eagle Ford play. Since its latest acquisition in June 30, 2014, the company holds approximately 226,00 acres in the Eagle Ford with operations in various stages of development.

Related: Sanchez Nearly Doubles Eagle Ford Acreage

Find out more at

Sanchez Energy Ends Year Strong

Sanchez Energy Eagle Ford Acreage Map
Sanchez Energy Eagle Ford Acreage Map

This week, Sanchez Energy announced fourth quarter and full year results for 2014 and updated the company’s capital spending plan for the new year.

In spite of dropping crude prices throughout the fall months, Sanchez reported fourth quarter revenues that were up 33% over the same period in 2013 and hit a record $172.5 million. The company also reported record production production averaging of 43,897 BOE/D.

Sanchez Energy has approximately 226,000 net acres in the Eagle Ford Shale in South Texas and includes 106,0000 acres in Catalina that were purchased in May 2014. This Dimmitt County property has proved to be a smart investment and is responsible for much of the company’s 2014 success.

Throughout the past year, we achieved significant production and reserves growth through both the transformative acquisition of the Catarina asset as well as the ongoing development of our legacy Eagle Ford assets. Revenues, production, and proved reserves all more than doubled in 2014
— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

Related: Sanchez Energy Reports Record Revenue in Q2 2014

Looking to 2015, Sanchez re-affirmed its capital plan at $600 - $650 million with production expected to average 40,000 to 44,000 BOE/DThe company will continue to focus on the Catarina property that continues to produce high rates of returns even in this lower commodity price environment. Company executives expect Catarina to produce the same high returns for the next 10 years.

Read the full report at