Sanchez Energy on Monday provided a capital spending and operations update following the closing of its acquisition of the Cotulla Eagle Ford properties from Hess Corporation.
Sanchez Energy President and Chief Executive Officer Tony Sanchez III commented, "As a result of the closing of our Cotulla asset acquisition and an updated review of our operational opportunities, we have increased our 2013 capital program and activity levels. The primary change to our capital program is the result of the addition of the new Cotulla assets, where we expect to run one rig continuously drilling approximately 10 net wells for the remainder of 2013. Furthermore, due to continued strong well performance in our Palmetto area, we have increased the number of wells we expect to drill by 4.5 net (9 gross) wells to a total of 17 net (34 gross) wells in 2013. In order to accommodate the increased well count in the Palmetto area, we expect a third rig to be added during the second half of the year. Given that we, along with our partner Marathon Oil Corporation, have shifted our development plans to an average of four wells per pad in this area, we expect the incremental production resulting from this increased well count to come on line either late in the fourth quarter of this year or early next year.
In the Marquis area, we continue to experience strong well performance and are on track to drill a total of 18 gross and net wells this year. A second rig is expected to arrive in the area this month, and we have shifted our operations and development plans to focus on multi-well pad drilling.
This increased level of activity is well within our technical and administrative capabilities and should enable us to reach a 2013 year-end production exit rate range of 15,000 to 17,000 boepd as well as position us for continued strong production growth through 2014, which we expect to exit producing between 20,000 and 22,000 boepd."
Sanchez Energy on May 31 closed its previously announced acquisition of Eagle Ford Shale assets from Hess with an effective date of March 1, 2013. Including the $13.25 million deposit previously paid, total consideration for the acquisition was $280.4 million, which includes the $265.0 million purchase price and $15.4 million in normal and customary closing adjustments. The final purchase price is subject to further customary post-closing adjustments. The transaction was funded from cash on hand from the net proceeds of the previously issued $225 million of 6.50 percent Cumulative Perpetual Convertible Preferred Stock, Series B and drawings under the Company's first lien credit facility.
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