Why SN is up today
Posted: Wed Mar 26, 2014 10:57 am
Summary Highlights
•Sanchez Energy lowered its total 2014 capital plan to $600 million - $650 million from $650 million - $700 million as a result of significant decreases in drilling and completions costs and efficiency improvements
•Full-year 2014 production guidance and well count to remain unchanged
•Current production of approximately 19,500 BOE/D
•6 (gross) rigs running with 15 (gross) wells in various stages of completion
•Members of the Company's management team will be attending the Howard Weil 42nd Annual Energy Conference in New Orleans, Louisiana from Wednesday, March 26 until Thursday, March 27. The presentation materials used for the conference will be available for download by visiting the Company's website: www.sanchezenergycorp.com
Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "After achieving and sustaining significant drilling and completion cost reductions as a result of continued operational improvements, we have decreased our 2014 capital plan to $600 million - $650 million from $650 million - $700 million while maintaining our full-year 2014 production guidance and without reducing the number of wells to be spud and completed. On the drilling side, we expect 90% of our wells to be on multi-well pads in 2014, up from 75% in 2013. The increase in multi-well pads has allowed us to achieve a 40% decrease in drilling time from spud to total depth and a 35% increase in average footage drilled per day. On the completions side, on average we have doubled the number of frac stages pumped per day and seen services costs continue to decline due to the use of zipper fracs on our multi-well pads. Overall, we have realized a 30% decrease in total well costs across our areas. These cost reduction factors have caused our production growth to be less consistent quarter over quarter due principally to the effects of multi-well pad drilling, but the increased capital efficiency is a significant benefit to our overall rates of return. We now anticipate well costs in the Alexander Ranch and Wycross areas of Cotulla to be between $5.5 million and $6.0 million and $7.5 million and $8.0 million, respectively. In the Marquis area, we anticipate well costs to be between $8.0 million and $8.5 million, a significant reduction from our initial appraisal phase well costs of $11 million to $14 million."
"We have now drilled our sixth and final pilot well at Prost O-1 in the Marquis appraisal program. Based on whole cores from pilots and extensive wire line logs from all six wells, we now have growing data indicating there is potential for a multi-horizon Eagle Ford resource play across portions of our Marquis block. Currently, our Marquis development has exclusively focused on the Lower Eagle Ford section, and we are excited about the additional potential for Upper Eagle Ford pay in this area. We have seen strong well results in the Prost block from Lower Eagle Ford zones of interest ranging from 25 feet to over 40 feet in thickness and recently obtained logs and cores have identified an Upper Eagle Ford zone of interest with similar thickness ranging from 10 feet to 45 feet across sections of our Marquis block. Additionally, seismic analysis indicates good Austin Chalk potential present in this block. As such, we are developing plans to separately appraise the Upper Eagle Ford and Austin Chalk resource potential later this year."
•Sanchez Energy lowered its total 2014 capital plan to $600 million - $650 million from $650 million - $700 million as a result of significant decreases in drilling and completions costs and efficiency improvements
•Full-year 2014 production guidance and well count to remain unchanged
•Current production of approximately 19,500 BOE/D
•6 (gross) rigs running with 15 (gross) wells in various stages of completion
•Members of the Company's management team will be attending the Howard Weil 42nd Annual Energy Conference in New Orleans, Louisiana from Wednesday, March 26 until Thursday, March 27. The presentation materials used for the conference will be available for download by visiting the Company's website: www.sanchezenergycorp.com
Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "After achieving and sustaining significant drilling and completion cost reductions as a result of continued operational improvements, we have decreased our 2014 capital plan to $600 million - $650 million from $650 million - $700 million while maintaining our full-year 2014 production guidance and without reducing the number of wells to be spud and completed. On the drilling side, we expect 90% of our wells to be on multi-well pads in 2014, up from 75% in 2013. The increase in multi-well pads has allowed us to achieve a 40% decrease in drilling time from spud to total depth and a 35% increase in average footage drilled per day. On the completions side, on average we have doubled the number of frac stages pumped per day and seen services costs continue to decline due to the use of zipper fracs on our multi-well pads. Overall, we have realized a 30% decrease in total well costs across our areas. These cost reduction factors have caused our production growth to be less consistent quarter over quarter due principally to the effects of multi-well pad drilling, but the increased capital efficiency is a significant benefit to our overall rates of return. We now anticipate well costs in the Alexander Ranch and Wycross areas of Cotulla to be between $5.5 million and $6.0 million and $7.5 million and $8.0 million, respectively. In the Marquis area, we anticipate well costs to be between $8.0 million and $8.5 million, a significant reduction from our initial appraisal phase well costs of $11 million to $14 million."
"We have now drilled our sixth and final pilot well at Prost O-1 in the Marquis appraisal program. Based on whole cores from pilots and extensive wire line logs from all six wells, we now have growing data indicating there is potential for a multi-horizon Eagle Ford resource play across portions of our Marquis block. Currently, our Marquis development has exclusively focused on the Lower Eagle Ford section, and we are excited about the additional potential for Upper Eagle Ford pay in this area. We have seen strong well results in the Prost block from Lower Eagle Ford zones of interest ranging from 25 feet to over 40 feet in thickness and recently obtained logs and cores have identified an Upper Eagle Ford zone of interest with similar thickness ranging from 10 feet to 45 feet across sections of our Marquis block. Additionally, seismic analysis indicates good Austin Chalk potential present in this block. As such, we are developing plans to separately appraise the Upper Eagle Ford and Austin Chalk resource potential later this year."