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United States : Sanchez Energy Announces Fourth Quarter and Full Year 2017 Financial Results and Operations Update.

Sanchez Energy Corporation (Sanchez Energy or the Company) today announced financial and operating results for the fourth quarter and full year 2017. Highlights include:

Fourth quarter 2017 production of nearly 82,000 barrels of oil equivalent per day (Boe/d), or 7.5 million barrels of oil equivalent (MMBoe), at the midpoint of the Companys 80,000 Boe/d to 84,000 Boe/d guidance for the quarter;

Full year 2017 production was approximately 25.7 MMBoe, or 70,320 Boe/d, for a year-over-year growth rate of 31 percent;

Proved reserves increased 88 percent, to a record 363 MMBoe, with a reserve replacement ratio in excess of 760 percent and an organic reserve replacement of approximately 172 percent;

The Companys year-end Comanche drilling inventory increased by approximately 800 gross locations, a result of successful staggered Lower Eagle Ford development tests;

A 17 well four-zone stack development test was completed at Briscoe Catarina South in Comanche Area 3, with wells averaging 30-day peak production rates of approximately 1,252 Boe/d from the two Lower Eagle Ford zones and 675 Boe/d from the two Upper Eagle Ford zones;

The successful stacked development test at Briscoe Catarina South confirms up to four economic targets in certain parts of the Comanche acreage;

The Company reported a net loss of $61.4 million for the fourth quarter 2017, net income of $35.8 million for the third quarter 2017, and net income of $12.3 million for the fourth quarter 2016;

The Company reported net income of $43.2 million for the year ended December 31, 2017, compared to a net loss of $141.5 million for the year ended December 31, 2016;

Fourth quarter 2017 revenues of approximately $246 million were 33 percent higher compared to third quarter 2017 and 96 percent higher compared to fourth quarter 2016;

Adjusted revenues (a non-GAAP financial measure that includes hedge settlements) were approximately $244.3 million during fourth quarter 2017, 25 percent higher compared to third quarter 2017 and 68 percent higher compared to fourth quarter 2016;

Full year 2017 revenues were approximately $740.3 million and full year 2017 Adjusted revenues (a non-GAAP financial measure that includes hedge settlements) were approximately $753.5 million;

Adjusted EBITDAX (a non-GAAP financial measure) was approximately $137.4 million during fourth quarter 2017, 39 percent higher compared to third quarter 2017 and 89 percent higher compared to fourth quarter 2016;

Full year 2017 Adjusted EBITDAX (a non-GAAP financial measure) was approximately $372 million, a 27 percent increase compared to full year 2016;

In February 2018, the Company announced and closed a comprehensive financing strategy which is expected to fully fund capital plans for the next several years; and

The Company has converted its accounting convention from the full-cost method to the successful efforts method, providing increased transparency and comparability to peers.

MANAGEMENT COMMENTS

2017 was a transformational year for Sanchez as we successfully integrated the Comanche asset, providing a tremendous growth platform and pathway to deleveraging the balance sheet, said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. The Comanche Transaction resulted in a significant increase in the scope and scale of our operations, creating a dominant acreage position for Sanchez Energy in the Western Eagle Ford. With approximately 487,000 gross (285,000 net) leasehold acres and roughly 3,700 identified net drilling locations in the Eagle Ford, we now project more than 15 years of capital efficient development opportunities, with over one billion barrels of net oil equivalent (Boe) resource potential.

As previously reported, we had strong operating results in the fourth quarter, with production increasing to nearly 82,000 Boe/d, or 7.5 MMBoe, and we finished 2017 with full year production of approximately 25.7 MMBoe. The year-over-year production growth rate of 31 percent was accentuated by an 88 percent increase in proved reserves at year-end 2017, leading to record proved reserves of 363 MMBoe. As a key measure of our success, we achieved an organic reserve replacement ratio of approximately 172 percent in 2017, in large part due to the expansion of proved locations in Central Catarina and the identification of a second Lower Eagle Ford target at Comanche. We continue to add drilling locations through our multi-zone development of the Lower Eagle Ford, our recently announced four-zone stack development tests at Briscoe Catarina South, and our step-out well tests at Chupadera Ranch in Comanche Area 7.

This quarters strong operating performance, together with increases in oil and NGL prices during the latter part of the year, resulted in Adjusted EBITDAX of $137.4 million for the fourth quarter 2017, an increase of 39 percent compared to third quarter 2017, and full year 2017 Adjusted EBITDAX of $372 million, an increase of 27 percent compared to the full year 2016. Importantly, the Companys operating margins continue to expand as our Eagle Ford assets realize the benefit of premium Gulf Coast pricing and increases in production are driving our per-unit operating costs lower.

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Publication:Mena Report
Article Type:Financial report
Date:Mar 3, 2018
Words:845
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