Sanchez Energy Announces First Quarter 2013 Production of 355 MBOE, Growth of 106% Over the Previous Quarter and 320% Over the Same Period a Year Ago Current Production is in Excess of 6,000 BOE/d

HOUSTON, April 23, 2013 /PRNewswire/ -- Sanchez Energy Corporation (NYSE: SN), a fast growing independent oil and gas company targeting the liquids-rich Eagle Ford Shale, Pearsall Shale, Austin Chalk, and Buda Limestone, today provided an operations update on the Company's activities.

Summary Highlights

  • Estimated first quarter 2013 production of 355 MBOE, an increase of 106% over the previous quarter and an increase of 320% as compared to the first quarter of 2012 with current production in excess of 6,000 BOE/d
  • Five new Prost wells in the Marquis area have recently come online with average initial production rates of 1,044 BOE/d, bringing total producing well count in this area to eight wells with two additional wells undergoing completion, one well waiting on completion, and one well currently drilling
  • Three new Palmetto wells have recently come online with average initial production rates of 1,200 BOE/d, bringing total producing well count in this area to 19 wells with three additional wells in initial flow back, three wells undergoing completion, three wells waiting on completion, and two wells drilling

Management Comments

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "Our first quarter 2013 production was well within our forecast and was 106% greater than our fourth quarter 2012 production. Currently, we are producing in excess of 6,000 BOE/d and expect further significant production increases in the second quarter of 2013 as we currently have 12 gross (7.5 net wells) in initial flow back, undergoing completion, or waiting on completion, leaving us well on track to meet or exceed our production and exit rate targets for the year.

In anticipation of this expected growth in production, we are doubling our processing and takeaway capacity in Palmetto to 20,000 bopd and 30 million cubic feet of gas per day. In Marquis, with five Prost wells coming online at an average initial production rate of 1,044 BOE/d and three more wells undergoing or waiting on completion, we are concurrently constructing the gathering system infrastructure to support the existing and future increases in production from our ongoing development program. Additionally, we expect to deploy a second rig in the Prost area in June 2013. As a result, we are able to turn our wells straight from flow back to sales, including gas, in a very short period of time. Recent increases in our net acreage position in the Prost portion of Marquis to approximately 7,500 net acres have allowed us to form six drilling units, and we are working toward additional acreage acquisitions in the area either via acreage trades or outright new leases in order to fill in remaining acreage gaps. Forming these large, contiguous blocks will not only support several years of development drilling but also provide for optimized operations and continued costs reductions.

We are continuing to see cost reductions across our three areas as completed well costs are trending under $10 million in the Palmetto and Marquis areas and under $6 million in the Maverick area. Furthermore, we are increasing our net potential drilling locations by moving to an average of 50 acre well spacing in both Palmetto and Marquis compared to 80 to 120 acre well spacing at year-end 2012.

Regarding our recently announced transaction, we are conducting our final due diligence and expect to close the acquisition before the end of the second quarter. These Eagle Ford assets will significantly add to our current production rate and increase our financial flexibility and funding capacity. With the acquired assets expected to provide a stable level of production and low risk development drilling locations, we believe they will generate sufficient cash flow to fund our currently contemplated development drilling program in this area. Given our growing operating momentum from our current assets and the planned new asset acquisition, we anticipate exiting 2013 with a pro forma production targeted exit rate range of 12,500 to 14,500 BOE/d."

Estimated First Quarter Production Volumes

Estimated total production for the first quarter was 355 MBOE. Crude oil represented approximately 78% of the total volume, NGL's 12%, and natural gas 10%. The recent completion of the gas gathering lines in the Prost area has allowed rapid first gas sales rather than flaring of gas, increasing gas production as a percentage of the Company's total production. In addition, the Company is now processing its gas at both Prost and Palmetto, resulting in growing NGL sales. Estimated first quarter production of 355 MBOE compares to 84.5 MBOE in the same quarter a year ago, or an increase of 320%, and an increase of 106% over the fourth quarter of 2012 level of 172.4 MBOE. The first quarter 2013 production exit rate was approximately 4,200 BOE/d, and current production is in excess of 6,000 BOE/d as we continue to bring wells online.

Well Status Update

The Company has three rigs currently running in its project areas, with two in Palmetto and one in Marquis. As detailed in the following table, the Company has 15 wells in various stages of drilling, completion, or initial flow back:


Well


     Area


Working
Interest


Status


Barnhart C #4


Palmetto


50%


Initial Flow Back

Barnhart #23


Palmetto


50%


Initial Flow Back

Barnhart #25


Palmetto


50%


Initial Flow Back

Barnhart C #1


Palmetto


50%


Undergoing Completion

Barnhart H #1


Palmetto


50%


Undergoing Completion

Barnhart #24


Palmetto


50%


Undergoing Completion

Barnhart #10


Palmetto


50%


Waiting On Completion

Barnhart #20


Palmetto


50%


Waiting On Completion

Barnhart #21


Palmetto


50%


Waiting On Completion

Barnhart #11


Palmetto


50%


Drilling

Barnhart #13


Palmetto


50%


Drilling

Prost C #7H


Marquis


100%


Undergoing Completion

Sante #1H


Marquis


100%


Undergoing Completion

Prost A #6H


Marquis


100%


Waiting On Completion

Prost A #5H


Marquis


100%


Drilling
















Operational Highlights By Area: 

Palmetto Area — Gonzalez County:

Sanchez Energy has interests in 19 producing wells, three wells in initial flow back, three wells undergoing completion, three wells waiting on completion, and two wells currently drilling in its Palmetto area. Since the end of the first quarter, three wells have been turned to sales with average initial production rates of 1,200 BOE/d on choke sizes from 12/64 to 16/64" with average FTP of 3,900 psi.

Marquis AreaFayette and Lavaca Counties:

Sanchez Energy has 8 producing wells, two wells undergoing completion, one well waiting on completion, and one well currently drilling in its Marquis area. One rig is continuously working in the Prost area with a second rig under contract to arrive in June. The five recent wells brought on line have average initial production rates of 1,044 BOE/d on choke sizes from 12/64 to 16/64" with average FTP of 2,900 psi.

Maverick AreaZavala and Frio Counties:

Sanchez Energy has 14 producing wells in its Maverick area. Current plans are to drill two wells in this area during 2013. We plan to spud the first well in late May or early June. This well will have a vertical pilot hole through the Pearsall formation, including logs and cores, and then land a lateral in the Eagle Ford section.

About Sanchez Energy Corporation

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 approximately 94,000 net acres targeting the liquids-rich Eagle Ford Shale, Pearsall Shale, Austin Chalk, and Buda Limestone. 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 (including statements regarding additional take-away capacity and constraints and initial production estimates) 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, successful competition of our recently announced acquisition and realization of anticipated benefits therefrom, 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, 2012 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"). 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 may use certain terms in our press releases, such as net 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.

Company contact:
Michael G. Long
Senior Vice President and Chief Financial Officer
Sanchez Energy Corporation
(713) 783-8000

SOURCE Sanchez Energy Corporation



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http://www.sanchezenergycorp.com

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