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It’s Full Steam Ahead for Sanchez Energy


The fast growing independent E&P company has been developing the South Texas region for many years, but their Eagle Ford drilling operations are about to go into overdrive.  Sanchez recently closed the private placement of $150 million of its 4.875% Cumulative Perpetual Convertible Preferred Stock.  This includes $25 million from the exercise of the initial purchaser’s overallotment option.  Net proceeds from the offering were roughly $144.6 million, including the exercised overallotment option.  These proceeds will go towards the advancement of the Company’s capital expenditures.  Sanchez’ primary play of operation is the prolific Eagle Ford Shale of south Texas and these funds will greatly accelerate the drilling program there.

According to President and CEO, Tony Sanchez, III, production has grown more than 90% from 1,200 BOE/d at the end of June to more than 2,300 BOE/d at the end of August.  He expects the 2012 production exit rate to be between 4,000 and 5,000 BOE/d.  This would be roughly a 400% increase in seven months.

Sanchez has amassed 95,000 net acres in the oil window of the Eagle Ford Shale and is ready to get down and dirty.  The company has made agreements and deals to acquire more acreage in the oil window over the past year or so.  Using Drillinginfo’s leasing data, here’s a look at Sanchez’ leasehold position.

In the Palmetto area, Sanchez plans to drill 17 net wells and spend $175 to $185 million within the next 18 months.  There will be 2 rigs drilling continuously to meet those expectations.  The company has plans to utilize tighter spacing across the southern portion of the Palmetto project area, initially to 80 acre from 120 acre spacing and testing 60 acre spacing and potential for 40 acre spacing.  A recent Sanchez corporate presentation states 115 net identified potential drilling locations with ~35 MMBoe of net resource potential using 80 acre well spacing.

In the Marquis area, Sanchez plans to drill a total of 9 net horizontal wells this year.  The company will continue to operate 1 rig, and in the meantime will interpret 3D seismic throughout the area.  Central production and gas gathering pipelines are planned to be constructed in order to meet the growing development program.

In the Maverick region, the area is largely de-risked.  Initially the 2012 drilling plan was to drill 5 net wells this year.   Taking into account the additional funding, 10 net wells are planned for this year, 2 vertical and 8 horizontal wells.  The company has 235 to 350 net locations with 60 to 90 MMBOE of net resource potential using 120 to 80 acre spacing.

Stay connected with other operators in the Eagle Ford by checking out the DNA folders in the Drillinginfo website.

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