Sanchez Energy (NYSE: SN) Expects to Double Production in 2017
Sanchez Energy Corporation (NYSE: SN) had a blockbuster 2016, partnering with Blackstone the companies acquired Anadarko’s acreage in the Eagle Ford which is expected to close in the first quarter of 2017. This acquisition adds 132 DUCs, 3,400 drilling locations and 67,000 net Boe per day. The company optimized its well design in Catarina decreasing drilling and completion costs which are currently around $3 million per well.
In 2017, the company is expecting to spend $425 to $475 million and increasing in 2018 to around $500 million. For the year, 91% of the budget is allocated to Catarina (37%), Maverick (23%) and Comanche (31%). The majority of activity in Catarina and Maverick will be in the first half of the year.
2016 Catarina Appraisal Wells Show Positive Results
Sanchez allocated $160 to $170 million of the capital budget to the Catarina area for this year. This includes running the two rigs currently, then dropping one during the middle of the year and bringing it back late in the third quarter. During 2016 the company enhanced its completion design increasing proppant amounts, shorter well spacing and reducing well costs down to about $3 million compared to the $7.5 million for pre 2014 completions.
Source: Sanchez Energy
Comanche Acquisition Increases Production and Adds to Drilling Inventory
In January Sanchez announced the acquisition of 155,000 net acres in the Eagle Ford with Blackstone Energy Partners in a 50/50 partnership. This included 132 drilled but uncompleted wells along with 67,000 net Boe per day providing short term cash flow. The acquired acreage has existing infrastructure to support drilling and completion activity with a pipeline system to support up to 12 rigs and 6 frac spreads working simultaneously.
Activity in 2017 will be focused on completing the DUC inventory, which should start in March, and drilling acreage near Catarina. Rig plans include moving four rigs to the area in mid-April and add a fifth in May. In Area 3 of the Comanche acreage the company is expecting to spend about $80 million drilling 61 gross wells and completing 40 development wells and 80 gross DUCs. In Area 5 the company expects to spend $55 million and drill 51 gross well while completing 20 development wells and 50 gross DUCs
Maverick & Javelina Taking a Backseat
In the Maverick area in Dimmit and Zavala counties Sanchez plans to complete 35 net wells with well spacing of 750 feet and spend about 23% of the budget for 2017. In Javelina the company is expecting to add capital to the area in the next year or so where they previously have seen good well results but don’t expect to spend much this year.
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