Sanchez Energy Announces Fourth Quarter Production of 1,731 MBOE, an Increase of 60% Over the Third Quarter of 2013, and 2013 Year-End Proved Reserves of 58.9 MMBOE, an Increase of 178% Compared to Year-End 2012

HOUSTON, Jan. 27, 2014 /PRNewswire/ -- Sanchez Energy Corporation (NYSE: SN) ("Sanchez Energy" or the "Company"), a rapidly growing independent oil and gas company targeting onshore U.S. Gulf Coast oil resource plays with a current focus on the Eagle Ford Shale and the Tuscaloosa Marine Shale, today provided an update on its fourth quarter 2013 operations and year-end 2013 reserves.

Summary Highlights

  • Sanchez Energy reported fourth quarter 2013 production of approximately 1,731 MBOE (18,810 BOE/D), an increase of 60% over the third quarter of 2013 and an increase of 905% compared to the same period a year ago.  Fourth quarter 2013 reported production included approximately 70 MBOE (750 BOE/D) of positive prior period adjustments, largely in natural gas liquids (NGLs) and natural gas volumes.  Daily average production, excluding 750 BOE/D associated with the positive prior period adjustments, was 18,060 BOE/D, exceeding the previously set forth guidance range of 15,000 to 17,000 BOE/D.
  • Reported production volumes consisted of 73% oil (75% before the prior period adjustments), 13% NGLs, and 14% natural gas.
  • 2013 year-end proved reserves increased to 58.9 MMBOE, an increase of 178% compared to year-end 2012.
  • Current production of approximately 19,000 BOE/D with 15 gross wells in various stages of drilling and completion.

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "2013 was a transformative year for the Company.  Our production and reserves grew tremendously as a result of successfully executing our 2013 capital plan and completing several acquisitions. We also entered into the Tuscaloosa Marine Shale, providing significant upside potential without reallocating substantial resources from the Eagle Ford Shale. Our focus in 2014 will be to continue to execute on our Eagle Ford development program, increasing efficiency and further reducing costs.

Our operated assets of Cotulla and Marquis have transitioned into development mode and are benefiting from the cost and timing efficiencies of pad drilling and zipper fracs. During the fourth quarter, we brought online approximately 32 net wells, including 8 net wells acquired from our Wycross acquisition, which drove the strong production for the quarter. A higher percentage of drilling capital this year is allocated to the areas where we operate allowing greater control over timing and costs in 2014. As a result of successful 40 acre pilot programs in our Palmetto, Cotulla, and Wycross areas, we have expanded our inventory of high quality drilling locations. While we continue to evaluate performance of 40 acre spacing for reserves impact, the results to date are highly encouraging, and we have modified development plans in these areas to maximize efficiency on 40 acres spacing. Our Marquis area remains a high growth area. In the fourth quarter, we derisked our locations on Prost D, E, and F units and recently we drilled some of our most productive wells to date in the area to the south in the Prost G and H units. Beyond the Prost area, we have wells in various stages of drilling and completions in the Five Mile Creek and Sante areas of Marquis, these areas have potential to provide significant growth to our number of locations in 2014."

Estimated Fourth Quarter and Full Year 2013 Production Volumes and 2013 Year-End Reserves

Estimated total production for the fourth quarter of 2013 was approximately 1,731 MBOE (18,810 BOE/D). Prior period adjustments increased total production for the fourth quarter by approximately 70 MBOE (750 BOE/D). Crude oil represented 73% of the total production stream (75% before the prior period adjustments), NGLs represented 13% (11% before the prior period adjustments), and natural gas represented 14% (14 % before the prior period adjustments). Estimated total production for the full year 2013 was 3,872 MBOE (10,607 BOE/D).



Three Months Ended December 31,


Year Ended December 31,



2013


2012


% Change


2013


2012


% Change

Total Production Volumes













     Oil (MBbls)


1,265


164


669%


2,909


418


596%

     Natural Gas (MMcf)


1,454


46


3,047%


3,049


301


912%

     NGLs (MBbls)


224


0


NM


455


1


NM

Total Production Volumes (MBOE)


1,731


172


905%


3,872


469


726%














Average Daily Production Volumes













     Oil (Bbls/d)


13,746


1,787


669%


7,969


1,142


598%

     Natural Gas (Mcf/d)


15,804


502


3,047%


8,352


823


915%

     NGLs (Bbls/d)


2,430


3


NM


1,247


2


NM

Total Production Volumes (BOE/D)


18,810


1,874


905%


10,607


1,281


728%

Sanchez Energy announced that proved reserves increased to 58.9 MMBOE at December 31, 2013, up 178% from 21.2 MMBOE at December 31, 2012. Crude oil constituted 77% (88% crude oil and NGLs) of Sanchez Energy's proved reserves at December 31, 2013, and 58% of the Company's proved reserves were classified as proved undeveloped at December 31, 2013 as compared to 82% at December 31, 2012. 

Note: The Company's estimated reserves were prepared by its independent reservoir engineering firm Ryder Scott & Company, L.P.

2014 Operating Capital Plan and Operations Update

Sanchez Energy's 2014 capital plan calls for spending approximately $650 million to $700 million to spud and complete 70 net wells and fund production facilities and related expenditures, additional acreage acquisitions, and seismic expenditures. Approximately 95% of the capital plan will be allocated towards drilling and completing wells, of which approximately 90% will be directed to the development of our Eagle Ford Share properties as outlined below:



2014 Operating Capital Plan ($MM)



Gross










% of


% of



Full Year


Net Wells


Net Wells






Operating


D&C

Project Area


Rig Count


Spud


Completed


Capex


Capital


Capital

 Marquis


3.0


35


32


$300

-

$315


46%


48%

 Palmetto


0.7


5


8


50

-

60


8%


9%

 Cotulla


0.5


9


9


60

-

70


10%


10%

 Wycross


1.5


19


19


145

-

155


22%


23%

 TMS


1.3


2


2


60

-

65


9%


10%

Total D&C Capital Plan


7.0


70


70


$615

-

$665


95%


100%

 Facilities, Leasing, and G&G








35


5%



Total Operating Capital Plan








$650

-

$700


100%



As detailed in the table below, Sanchez Energy currently has 6 rigs (4 operated and 2 non-operated rigs) running across its Eagle Ford areas and 1 non-operated rig running in the Tuscaloosa Marine Shale with 15 gross wells in various stages of completion.









Gross



Gross


Gross


Net


Wells Waiting / 

Project


Producing


Rigs


Rigs


Undergoing

Area


Wells


Running


Running


Completion

Marquis


34


4


3


8










Palmetto


53


1


1


3










Cotulla


85


1


1


4










Wycross


15


-


-


-










TMS / Other


1


1


-


-










Total


188


7


5


15

First Quarter 2014 Operating and Financial Guidance

Sanchez Energy reiterates its full year 2014 average production guidance range of 21,000 to 23,000 BOE/D and issues its operating and financial guidance for the first quarter of 2014:

Metrics


Range






Production Guidance (BOE/D)





   First Quarter 2014 Average


18,000

20,000






First Quarter 2014 Financial Guidance ($/BOE)





   Oil and Natural Gas Production Expenses


$8.50

$10.50

   Production and Ad Valorem Taxes


$5.00

$6.00

   Cash G&A


$5.00

$6.00

About Sanchez Energy Corporation

Sanchez Energy Corporation is an independent exploration and production company focused on the acquisition and development of unconventional oil resources in the onshore U.S. Gulf Coast, with a current focus on the Eagle Ford Shale where the Company has assembled approximately 120,000 net acres. The Company also has approximately 40,000 net acres targeting the Tuscaloosa Marine Shale. For more information about Sanchez Energy Corporation, please visit our website: www.sanchezenergycorp.com

Forward Looking Statements

This press release contains, and our officers and representatives may from time to time make, 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, including statements relating to successfully closing our announced acquisitions, the anticipated benefits of our acquisitions, successfully obtaining the financing for any proposed acquisitions and other aspects of any proposed acquisitions. 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 failure of acquired assets to produce as anticipated, failure to successfully integrate acquired assets, failure to continue  to produce  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, 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.  In light of these risks, uncertainties and assumptions, the events anticipated by Sanchez Energy's forward-looking statements may not occur, and, if any of such events do occur, Sanchez Energy may not have correctly anticipated the timing of their occurrence or the extent of their impact on its actual results.  Accordingly, you should not place any undue reliance on any of Sanchez Energy's forward-looking statements.  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
Executive Vice President and Chief Financial Officer
Sanchez Energy Corporation
(713) 783-8000

Gleeson Van Riet
SVP, Capital Markets & IR
Sanchez Energy Corporation
(713) 783-8000

SOURCE Sanchez Energy Corporation



RELATED LINKS
http://www.sanchezenergycorp.com

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