HOUSTON, July 18, 2012 /PRNewswire/ -- Sanchez Energy Corporation (NYSE: SN), today provided a reserves, drilling, and production update on the Company's activities in the Eagle Ford Shale, where it has approximately 95,000 net acres.
Sanchez Energy has announced that proved reserves increased by 125%, reaching 15.0 million barrels of oil equivalent ("MMBOE") at June 30, 2012, up from 6.7 MMBOE at December 31, 2011. 87% of Sanchez Energy's proved reserves at June 30, 2012 were oil-weighted, and 91% of the Company's proved reserves were classified as proved undeveloped at June 30, 2012 as compared to 86% at December 31, 2011. The present value of the future net revenues ("PV10") of Sanchez Energy's proved reserves at June 30, 2012 was $308.9 million as compared to $152.4 million at December 31, 2011.Additionally, Sanchez Energy's mid-year 2012 reserve report identified 9.8 MMBOE of probable reserves and 4.0 MMBOE of possible reserves, for total 3P reserves of 28.8 MMBOE. The majority of Sanchez Energy's 3P reserves are located within its 9,500 net acres in the Palmetto area in Gonzales County, Texas. 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. Sanchez Energy has internally estimated that it has between 800 and 1,200 net unrisked Eagle Ford drilling locations across its 95,000 net acre position (using a range of 120 acre to 80 acre well spacing) targeting a total resource potential of approximately 250 to 380 MMBOE. Second Quarter 2012 Exit Production Rate and Operational Update Sanchez Energy's estimated net production exit rate at June 30, 2012 was approximately 1,200 barrels of oil equivalent ("BOE") per day, of which approximately 90% was oil, which represents a 50% increase over March 31, 2012 estimated net production exit rate of 800 BOE/day. At June 30, 2012, the Company had five wells waiting on completion. There are two rigs currently running, one in the Palmetto area and one in the Marquis area, with an additional rig to be added to the Palmetto area in August. Production is expected to continue growing in the third and fourth quarters as the Company executes the remainder of its 2012 drilling plan and adds the five wells currently waiting on first production. Sanchez Energy reaffirms its 2012 production exit rate guidance range of 4,000 to 5,000 BOE/day. Significant second quarter operational highlights by area include:Palmetto Area in Gonzalez County:
- The Barnhart #7 well (W.I. 50%, 15 frack stages), a short lateral, lease off-set well located in the Company's northern portion of its Palmetto area, was drilled to a measured depth of 14,020 feet (lateral length of 4,332 feet) and placed on production May 25, 2012. Initial production was approximately 502 BOE/day and average production for the first 30 days was 369 BOE/day on a 14/64 choke.
- The Barnhart #8 well (W.I. 50%, 10 frack stages), also located in the Company's northern portion of its Palmetto area, was drilled to a measured depth of 12,595 feet (lateral length of 3,678 feet) and placed on production June 18, 2012. Initial production was approximately 555 BOE/day on a 16/64 choke. The well encountered mechanical issues entailing lost returns of drilling fluids and a suboptimal cement job, all resulting in a short lateral and only 10 frack stages.
- The Barnhart #9 well (W.I. 50%) and the Ward E #1 well (W.I. 50%) have been drilled and cased and are waiting on completion.
- Drilling on the Barnhart #14 well (W.I. 50%) will commence shortly and will be immediately followed by the Barnhart #15 (W.I. 50%) using the same rig and pad. These two wells will be located adjacent to the Barnhart #5 and #6, which are the best two performing wells in our Palmetto area to date.
- A second rig will start drilling the Barnhart #10, followed by the Barnhart #11 (both W.I. 50%), in early August from the same surface location as the Barnhart #5 and #6. The two rigs drilling in the Palmetto area are expected to work continuously throughout 2012 to drill an expected 9 gross, 4.5 net wells on the Company's southern acreage area for a total of 13 gross, 6.5 net wells for 2012.
- The Ray #1H well (W.I. 100%, 16 frack stages) was drilled to a measured depth of 11,965 feet (lateral length of 5,395 feet) and placed on production May 19, 2012. Initial production was approximately 214 BOE/day and average production for the first 30 days was 113 BOE/day on a 20/64 choke.
- The Petro-Pards #1H well (W.I. 100%, 16 frack stages) was drilled to a measured depth of 12,385 feet (lateral length of 6,155 feet) and placed on production June 26, 2012. Initial production was approximately 312 BOE/day on a 48/64 choke.
- The Petro-Pards #2H well (W.I. 100%, 18 frack stages) was drilled to a measured depth of 12,830 feet (lateral length of 6,414 feet) and placed on production June 26, 2012. Initial production was approximately 456 BOE/day on a 48/64 choke.
- The Goodwin #1V well (W.I. 100%), the Company's second vertical well in the Maverick area, was drilled to a measured depth of 6,400 feet and was completed using a single-stage frack. The well was placed on production June 30, 2012, and its initial production was approximately 264 BOE/day on a 12/64 choke.
- The Mark & Sandra #2H well (W.I. 100%) has been drilled and cased and is currently undergoing completion.
- Sanchez Energy has drilled all five gross and net wells in its 2012 drilling plan for the Maverick area. After reviewing the vertical wells' results, which have been encouraging to date, we will likely add another three to four vertical Maverick wells to our budget for the second half of this year.
- The Prost #1H and Prost #2H wells (both W.I. 100%) have been drilled and cased and are waiting on completion. Completion operations are expected to commence during the second half of July, and these wells will be fracked back-to-back.
- The rig used to drill the Prost #2H well is currently moving to the next Marquis location, which will be the Sante A #1H, and it will drill two 100% W.I. wells back to back from adjoining units with the second well to be the Salud A #1H. Initial production results from the two Prost wells are expected in August.
- Sanchez Energy plans to drill a total of six gross and net horizontal wells in its Marquis area in 2012.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV