Energy Prospectus

Adjusted Net Income came in above my forecast.

HOUSTON, Nov. 4, 2014 /PRNewswire/ -- Sanchez Energy Corporation (SN) (the "Company," "SN," "Sanchez Energy," "we," "our" or similar terms), today announced the Company's operating and financial results for the third quarter 2014, which included the following highlights:

HIGHLIGHTS FOR THIRD QUARTER 2014
•Record revenues of $207.4 million, an increase of 120% over the same period a year ago
•Record production of 3,552 MBOE; an average for the period of 38,613 BOE/D
•Net income attributable to common stockholders of $42.7 million, as compared to a net loss attributable to common stockholders of $1.6 million reported over the same period a year ago, resulting in basic and diluted earnings per share of $0.77 and $0.69, respectively
•Adjusted EBITDA, a non-GAAP financial measure defined below, of $148.2 million, an increase of 132% over the same period a year ago
•Adjusted Net Income, a non-GAAP financial measure defined below, of $12.8 million, a decrease of 5% over the same period a year ago
•Liquidity of $896 million as of September 30, 2014 consisting of $596 million in cash and cash equivalents and a $362.5 million unused borrowing base (with a $300 million elected commitment amount), under our revolving credit facility

From the press release: "In light of the recent downturn in oil prices, SN has revised its preliminary 2015 capital plan range downwards to approximately $850 to $900 million, a reduction of approximately $250 - $300 million from the midpoint of the previous guidance. Importantly, SN will focus on the development drilling of its existing multi-year inventory of high rate of return projects where it has achieved significant per well cost savings, and deemphasize step-out and appraisal drilling, yet preserve the optionality of its significant land position which is mostly held by production. This temporary reallocation of capital spending away from exploration and appraisal drilling in our Marquis and TMS areas toward development drilling does not diminish our expectations about those areas where the results we and others have experienced continue to improve and are meeting or exceeding our expectations. As such, total production for 2015 is expected to average approximately 50,000 BOE/D, which represents a growth rate of approximately 70% when compared to expected full-year 2014 production and a fourth quarter 2014 to fourth quarter 2015 increase in excess of 25%. The Company's anticipated 2015 capital program is expected to be fully funded through cash and cash equivalents on hand and cash flow from operations without drawing down on the Company's availability under its revolving credit facility, assuming average oil prices of $80 per barrel and natural gas prices of $3.75 per Mmbtu."

Q3 production was 38,613 BOE/Day

An updated Net Income & Cash Flow Forecast model for Sanchez Energy (SN) has been posted under the Sweet 16 Tab.

Primarily because of their lowered production guidance (50,000 boepd in 2015), my Fair Value Estimate has been lowered by $3.20 to $37.80/share.
Compares to First Call's Price Target of $35.18.

SN is going to complete a lot of Eagle Ford wells this quarter, so exit rate should be 44,000 to 45,000 boepd. That should draw some attention.

In a report published Thursday, MLV & Co analyst Chad Mabry reiterated a Buy rating on Sanchez Energy Corp. (NYSE: SN), but lowered the price target from $40.00 to $33.00.

In the report, MLV & Co noted, “SN is scaling back its activity in response to a less favorable oil price outlook. 2015 capex was reduced by ~25% to $850-$900 million (from $1,100-$1,200) in order to focus on core development drilling and de-emphasize step-out and appraisal work. In conjunction, 2015 guidance was lowered to ~50 MBoe/d (from 53-58 MBoe/d). We're adjusting our production model to reflect SN's revised drilling program which consists of 6.25 gross rigs (vs. 8.0 previously), with reductions at Marquis to 1 rig (vs. 2) and TMS to 0.25 rig (vs. 1.0). As a result, our 2015 production forecast declines to ~50 MBoe/d (from 55.6). The lower production forecast and impact of the reduced activity on our upside calculations combine to take our NAV-based target price to $33 (from $40). We reiterate our Buy rating on compelling valuation and see shares of SN outperforming as the company continues to demonstrate the upside of its portfolio, specifically at its newly-acquired Catarina asset. Near-term catalysts here include results from its initial Lower Eagle Ford wells and positive developments on condensate exports; both are expected in early 2015.”