2014

Sanchez Energy Announces Year-End 2012 Production Exit Rate Increase of 233% to 4,500 BOE/d and Proved Reserves Increase of 216% to 21.2 MMBOE Compared to Year-End 2011

HOUSTON, Jan. 22, 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 a production, reserves, and operations update on the Company's activities.

Summary Highlights

  • 2012 year-end production exit rate of approximately 4,500 barrels of oil equivalent per day ("BOE/d"), an increase of 233% over year-end 2011 production exit rate and an increase of 165% over third quarter 2012 production exit rate
  • 2012 year-end proved reserves increased to 21.2 million barrels of oil equivalent ("MMBOE"), an increase of 216% compared to 2011 year-end
  • The Prost B #1H well, in the Marquis area, had a 24-hour initial production rate of 1,114 BOE/d and sustained average production over the first 30 days of 936 BOE/d on a 14/64 choke
  • The Barnhart #15 well, in the Palmetto area, had a 24-hour initial production rate of 3,139 BOE/d on a 32/64 choke before being restricted to a 16/64 choke due to take-away capacity constraints

Management Comments

Tony Sanchez III, President and Chief Executive Officer said, "We have significantly increased our reserves, production, and cash flow over the past year by successfully executing our 2012 drilling plan. Our 2012 production exit rate was approximately 4,500 BOE/d, which is an increase of 165% compared to the third quarter of 2012 and an increase of 233% when compared to our 2011 production exit rate. Due to take-away constraints and central production facility startup issues associated with the Palmetto area, we estimate our year-end production was adversely impacted by approximately 750 BOE/d. Additional facility and take-away capacity will be added in the first half of 2013 to handle our expected production growth in that area.

We continue to experience healthy growth in our proved reserves as we have successfully derisked a growing portion of our undeveloped acreage, and we are turning our attention to developing our positions in an efficient manner while being focused on continued cost reduction.

Tighter well-spacing tests in each of our project areas is expected to result in a material increase of our net identified Eagle Ford drilling locations, proved reserves, and net resource potential, which is currently based on 80 to 120 acre well spacing. In the Palmetto area, we are drilling the third well of a 5-well, 40 acre spacing pilot on the southern part of the Barnhart ranch.  In Marquis we are also drilling a 60 acre spacing test in the western Prost area.  Our assets also hold potential from the Buda Limestone, Austin Chalk, and Pearsall Shale formations that provide additional upside opportunities. We foresee drilling and testing additional formations in the second half of 2013 to further understand the potential of our existing acreage.

We expect to issue a 2013 capital program and production guidance press release by early February, after our planned late January Board meeting."

2012 Production Exit Rate and Well Status Update

Sanchez Energy's production exit rate at December 31, 2012, was approximately 4,500 BOE/d, of which about 86% was oil. This is a 165% increase over the third quarter 2012 production exit rate of 1,700 BOE/d and a 233% increase over the 2011 production exit rate of 1,350 BOE/d.

There are four rigs currently running in the Company's project areas, with two in Palmetto and two 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 #2


Palmetto


50%


Waiting On Completion

Barnhart C #3


Palmetto


50%


Waiting On Completion

Barnhart #23


Palmetto


50%


Waiting On Completion

Barnhart #24


Palmetto


50%


 Waiting On Completion

Barnhart #30


Palmetto


50%


Waiting On Completion

Barnhart #25


Palmetto


50%


Drilling

Barnhart #20


Palmetto


50%


Drilling

Prost B #2H


Marquis


100%


Waiting On Completion

Prost C #1H


Marquis


100%


Waiting On Completion

Prost C #8H


Marquis


100%


Waiting On Completion

Prost C #2H


Marquis


100%


Waiting On Completion

Prost B #3H


Marquis


100%


Drilling

Prost C #7H


Marquis


100%


Drilling

Petro-Pards #4H


Maverick


100%


Initial Flow Back

Soliz #1V


Maverick


100%


Initial Flow Back

2012 Year-End Reserves

Sanchez Energy announced that proved reserves increased to 21.2 MMBOE at December 31, 2012, up 41% from 15.0 MMBOE at June 30, 2012, and up 216% from 6.7 MMBOE at December 31, 2011.  Oil constituted 86% of Sanchez Energy's proved reserves at December 31, 2012, and 82% of the Company's proved reserves were classified as proved undeveloped at December 31, 2012, as compared to 91% at June 30, 2012. 

Additionally, Sanchez Energy's 2012 year-end reserve report identified 6.6 MMBOE of probable reserves and 4.8 MMBOE of possible reserves, for total 3P reserves of 32.6 MMBOE, up 13% from 28.8 MMBOE at June 30, 2012, and up 29% from 25.3 MMBOE at December 31, 2011. 

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

Operational Highlights By Area:

Palmetto Area — Gonzalez County:

Sanchez Energy has 16 producing wells, five wells waiting on completion, and two wells currently drilling in its Palmetto area. Recent highlights include the following:

  • The Barnhart #14 well (W.I. 50%, 23 frack stages) was drilled to a measured depth of 19,316 feet (lateral length of 7,176 feet) and placed on production on November 28, 2012. Initial production was approximately 1,790 BOE/d on a 16/64 choke and average production for the first 30 days was 1,324 BOE/d. 
  • The Barnhart #15 well (W.I. 50%, 25 frack stages) was drilled to a measured depth of 19,653 feet (lateral length of 7,424 feet) and placed on production on November 29, 2012. Initial production was approximately 3,139 BOE/d on a 32/64 choke and average production for the first 30 days was 1,389 BOE/d.  After flowing on a 32/64 choke for three days, the Barnhart #15 well was restricted to a 16/64 choke due to temporary facility capacity constraints.
  • The Barnhart #18 well (W.I. 50%, 17 frack stages) was drilled to a measured depth of 16,478 feet (lateral length of 4,965 feet) and placed on production on December 6, 2012. Initial production was approximately 1,657 BOE/d on a 14/64 choke and average production for the first 30 days was 1,392 BOE/d.
  • The Barnhart #19 well (W.I. 50%, 18 frack stages) was drilled to a measured depth of 15,354 feet (lateral length of 5,380 feet) and placed on production on December 6, 2012. Initial production was approximately 1,651 BOE/d on a 14/64 choke and average production for the first 30 days was 1,377 BOE/d.
  • The Barnhart A #1 well (W.I. 50%, 14 frack stages) was drilled to a measured depth of 16,788 feet (lateral length of 4,708 feet) and placed on production on December 12, 2012. Initial production was approximately 948 BOE/d on a 16/64 choke and average production for the first 30 days was 748 BOE/d. 
  • The Barnhart A #2 well (W.I. 50%, 14 frack stages) was drilled to a measured depth of 16,864 feet (lateral length of 6,210 feet) and placed on production on December 12, 2012. Initial production was approximately 1,173 BOE/d on a 16/64 choke and average production for the first 30 days was 794 BOE/d.
  • The Barnhart C #2 well (W.I. 50%) was drilled to a measured depth of 16,720 feet (lateral length of 5,704 feet) and is currently waiting on completion. Initial production is expected by May 2013.
  • The Barnhart C #3 well (W.I. 50%) was drilled to a measured depth of 14,491 feet (lateral length of 5,140 feet) and is currently waiting on completion. Initial production is expected by May 2013.
  • The Barnhart #23 well (W.I. 50%) was drilled to a measured depth of 12,741 feet (lateral length of 4,895 feet) and is currently waiting on completion. Initial production is expected by May 2013.
  • The Barnhart #24 well (W.I. 50%) was drilled to a measured depth of 16,235 feet (lateral length of 4,811 feet) and is currently waiting on completion. Initial production is expected by May 2013.
  • The Barnhart #30 well (W.I. 50%) was drilled to a measured depth of 16,946 feet (lateral length of 5,241 feet) and is currently waiting on completion. Initial production is expected by May 2013.
  • The Barnhart #25 well (W.I. 50%) is currently being drilled from the same pad location as the Barnhart #23 and #24. The anticipated lateral length for this well is approximately 5,400 feet. Initial production is expected by May 2013.
  • The Barnhart #20 well (W.I. 50%) is currently being drilled. The anticipated lateral length for this well is approximately 5,800 feet.
  • The Barnhart #23, #24, and #25 wells are part of a five-well pilot program (which will also include the Barnhart C #1 and C #4) from a single pad to test 40 acre spacing. All wells will be fracture stimulated once drilling operations on this pad are complete with initial production expected by May 2013. Additionally, the Barnhart #23, #25, and C #1 are part of a micro-seismic program to gather timely information on completions that can be applied across the Palmetto area and will provide subsurface information for seismic attribute analysis to better understand the reservoir and its production capabilities and profile.

Marquis AreaFayette and Lavaca Counties:

Sanchez Energy has three producing wells, four wells waiting on completion, and two wells currently drilling in its Marquis area. 3-D seismic covering a large portion of the Marquis area is being acquired and will be processed in the second quarter of 2013. The Company expects that seismic interpretation will enhance its development plan in the second half of 2013. A gas pipeline has been completed in the Prost area with first sales of natural gas recorded in mid-January 2013. Recent highlights include the following:

  • The Prost B #1H well (W.I. 100%, 26 frack stages) was drilled to a measured depth of 16,905 feet (lateral length of 5,689 feet) and placed on production on November 27, 2012. Initial production was approximately 1,114 BOE/d on a 14/64 choke and average production for the first 30 days was 936 BOE/d.
  • The Prost B #2H well (W.I. 100%) was drilled to a measured depth of 17,032 feet (lateral length of 6,012 feet) and is currently waiting on completion. Initial production is expected by the end of March 2013.
  • The Prost C #1H well (W.I. 100%) was drilled to a measured depth of 18,146 feet (lateral length of 6,436 feet) and is currently waiting on completion. Initial production is expected by the end of March 2013.
  • The Prost C #2H well (W.I. 100%) was drilled to a measured depth of 14,889 feet (lateral length of 5,940 feet) from the same pad location as the Prost C #1H and is currently waiting on completion. The Prost C #2H well will be fracture stimulated immediately following the Prost C #1H well. Initial production is expected by the end of March 2013.
  • The Prost C #8H well (W.I. 100%) was drilled to a measured depth of 16,718 feet (lateral length of 4,800 feet) and is currently waiting on completion. Initial production is expected in April 2013.
  • The Prost B #3H well (W.I. 100%) is currently being drilled from the same pad location as the Prost B #2H well. The anticipated lateral length for this well is approximately 5,600 feet. The Prost B #3H well will be fracture stimulated immediately following the Prost B #2H well. Initial production is expected by the end of March 2013.
  • The Prost C #7H well (W.I. 100%) is currently being drilled from the same pad location as the Prost C #8H well. The anticipated lateral length for this well is approximately 5,100 feet. The Prost C #7H well will be fracture stimulated immediately following the Prost C#8H. Initial production is expected in April 2013.

Maverick AreaZavala and Frio Counties:

Sanchez Energy has 12 producing wells and two wells in initial flow back in its Maverick area. Recent highlights include the following:

  • The Mark & Sandra #3H well (W.I. 100%, 18 frack stages) was drilled to a measured depth of 10,565 feet (lateral length of 4,282 feet) and placed on production on December 19, 2012. Initial production was approximately 314 BOE/d on a 12/64 choke.
  • The Petro Pards #3H well (W.I. 100%, 18 frack stages) was drilled to a measured depth of 13,735 feet (lateral length of 7,344 feet) and placed on production on January 5, 2012. Initial production was approximately 543 BOE/d on a 14/64 choke. The completion of this well is being performed as two separate frack jobs in order to test the efficiency of various stimulation designs. The Company has completed approximately 4,500 feet of the lateral and plans to complete the remaining portion of this well in the first quarter of 2013.
  • The Woodbury #1V well (W.I. 100%), a vertical well, was drilled to a measured depth of 6,087 feet and placed on production on January 2, 2012. Initial production was approximately 100 BOE/d.
  • The Petro Pards #4H well (W.I. 100%, 19 frack stages) was drilled to a measured depth of 11,950 feet (lateral length of 5,590 feet) and is currently in initial flow back. Initial production is expected in February 2013.
  • The Soliz #1V well (W.I. 100%), a vertical well, was drilled to a measured depth of 5,521 feet and is currently in initial flow back. Initial production is expected in February 2013.

A summary table of all wells recently brought online is below:

Online Date


Well


Area


W.I.


Lateral Length (feet)


Frack Stages


Choke Size


24H Initial Production (BOE/d)


30 Day Average Daily Production

(BOE/d) *

10/17/12


Ward E #1


Palmetto


50%


4,307


17


16/64


370


285

11/28/12


Barnhart #14


Palmetto


50%


7,176


23


16/64


1,790


1,324

11/29/12


Barnhart #15


Palmetto


50%


7,424


25


32/64


3,139


1,389

12/6/12


Barnhart #18


Palmetto


50%


4,965


17


14/64


1,657


1,392

12/6/12


Barnhart #19


Palmetto


50%


5,380


18


14/64


1,651


1,377

12/12/12


Barnhart A #1


Palmetto


50%


4,708


14


16/64


948


748

12/12/12


Barnhart A #2


Palmetto


50%


6,210


14


16/64


1,173


794

11/27/12


Prost B #1


Marquis


100%


5,689


26


14/64


1,114


936

12/19/12


Mark & Sandra #3H


Maverick


100%


4,282


18


12/64


314


N/A

1/2/13


Woodbury #1V


Maverick


100%


N/A


N/A


N/A


100


N/A

1/5/13


Petro Pards #3H


Maverick


100%


7,344


18


14/64


543


N/A

*30-day average production data is not available for certain wells that have not been online for sufficient time

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 95,000 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, 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, 2011 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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