Well Lateral Length | Top Story | Production | Second Quarter (2Q) Update | Initial Production Rates-30-Day | Capital Expenditure | Drilling Activity | Drilling Program-Rigs Running

Sanchez to Cut Rig Fleet ~30% in Q3 to Five Rigs; Output Jumps 43% from Q1

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   |    Thursday,August 10,2017

[Summary: Sanchez reported its Q2 2017 results. Highlights from its call / release include:

- Announced a preliminary 2018 capex of $500 million (up +11% from 2017's midpoint)

- Q2 2017 production of 6.7 MMBOE, or approximately 73,341 BOEPD (up +43% over Q1 2017)

- 2017 Maverick development program delayed due to acquisition of Comanche asset

Slowing Down Drilling in 3Q

Currently running 7 gross rigs in the Eagle Ford (5 at Comanche / 2 at Catarina), however Sanchez plans to slow down drilling activity moving from 7 rigs currently to roughly 5 rigs in September.

Eagle Ford IPs

Stumberg Ranch - Four wells with 10,000' laterals hit IP30s of 1,950 Boe/d, (+20% above type curve)


ORIGINAL RELEASE:

HOUSTON, Aug. 09, 2017 (GLOBE NEWSWIRE) -- Sanchez Energy Corporation ("Sanchez Energy" or the "Company"), today announced operating and financial results for the second quarter 2017. Highlights include:

  • Second quarter 2017 production totaled approximately 6.7 million barrels of oil equivalent ("MMBoe"), or approximately 73,341 barrels of oil equivalent per day ("Boe/d"), an increase of approximately 43 percent over first quarter 2017 production; 
  • Four Lower Eagle Ford horizontal wells, with an average lateral length of approximately 10,000 feet, that were brought on-line at the Stumberg Ranch during the second quarter 2017 achieved an average 30-day production rate of approximately 1,950 Boe/d, which is approximately 20 percent above the type curve after normalizing for lateral length;
  • Second quarter 2017 revenues were approximately $175.7 million, an increase of approximately 31 percent over the first quarter 2017; 
  • Adjusted Revenue (a non-GAAP financial measure), inclusive of hedge settlements, was approximately $182.9 million during the second quarter 2017; 
  • The Company reported net income of $46.3 million during the second quarter 2017 compared to $9.7 million during the first quarter of 2017 and Adjusted EBITDA (a non-GAAP financial measure) of approximately $85.1 million during the second quarter 2017, which was up approximately 68 percent when compared to the first quarter 2017; 
  • The Company raised approximately $67 million in cash during the second quarter through the sale of its Marquis asset, remaining Cotulla assets, and 10 percent interest in Silver Oak II Gas Processing Facility; and
  • As of June 30, 2017, the Company had approximately $560 million in liquidity, with approximately $128 million in cash and cash equivalents and approximately $432 million of combined borrowing capacity under the Company's two bank credit facilities.

MANAGEMENT COMMENTS

"The second quarter 2017 marked our first full quarter with the newly acquired Comanche assets," said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. "Since closing the Comanche transaction on March 1, 2017, we have been able to utilize our completion methods on the newly acquired acreage to drive excellent results, contributing to a production increase of 43 percent over the prior quarter. As previously reported, based on available data for Dimmit County we believe our most recent Stumberg Ranch horizontal wells at Comanche are achieving record production levels, with the Stumberg Ranch 55H well showing a 24-hour initial production rate of approximately 3,800 Boe/d and oil-weighing of approximately 72 percent. Given the well's production results, the Stumberg Ranch 55H appears on pace to achieve payout in only 12 months at current strip pricing. On average, the four long horizontal wells at Stumberg Ranch achieved 30-day production rates of 1,950 Boe/d. These strong production results, combined with our focus on well costs, allow us to deliver solid rates of return on our drilling activities, even in today's challenging commodity price environment. 

"Driven by the positive impact of the Comanche transaction, our second quarter 2017 Adjusted EBITDA increased more than 68 percent over the prior quarter. We achieved this level of financial performance despite the impact of the large completion trials at Catarina, which did not provide the production response we expected. As we disclosed in our operational update last month, we have returned to our standard well completion design for the 32 Catarina wells that remain in our 2017 development plan, and now expect to reach our production growth expectations of 90,000 Boe/d to 100,000 Boe/d in the first half of 2018. We also anticipate that cash margins will improve throughout the second half of 2017 and into 2018, as increases in production will tend to reduce our costs on a per unit basis.

"Given the current operating environment, we remain focused on maintaining adequate liquidity to execute our drilling plans. With that in mind, we raised approximately $67 million during the quarter from the sale of our Marquis asset, remaining Cotulla assets, and 10 percent interest in Silver Oak II Gas Processing Facility, resulting in a cash balance of $128 million as of June 30, 2017 and total liquidity, including borrowing capacity under our two credit facilities, of approximately $560 million. Additionally, in July 2017 we announced our intention to reduce our 2018 capital spending by approximately $75 million to $100 million, compared to our original $500 million guidance, in order to better align capital spending with operating cash flow, while remaining focused on higher rate of return projects that optimize capital efficiency. This reduction in capital spending, together with our strong liquidity position and bank of 30 wells against our 2017-18 Catarina drilling commitment, provides us with a considerable amount of financial and operating flexibility as we look to execute our plans over the next 12 to 18 months, and drive shareholder value."

OPERATIONS UPDATE

During the second quarter 2017, the Company spud 48 gross (33.9 net) wells and completed and turned on-line 63 gross (27 net) wells. Sanchez Energy brought on-line 42 wells at Comanche, 11 wells at Catarina, 6 wells at Maverick and four non-operated wells. As of June 30, 2017, the Company had drilled 68 wells, surpassing the 50 well annual drilling commitment at Catarina that ran from July 1, 2016 to June 30, 2017. With 18 wells above the drilling commitment, and a bank of wells carried over from previous year's drilling commitment, Sanchez Energy has banked the maximum allowable 30 wells as of June 30, 2017, which can be used towards the next annual drilling commitment that runs from July 1, 2017 through June 30, 2018.

The cost of wells completed at Catarina during the second quarter 2017 averaged approximately $3.9 million per well as the Company tested significantly enhanced completion designs. The Catarina wells were completed with proppant loading of approximately 3,000 pounds per foot of proppant, which is 70 percent more proppant and fluids when compared to well designs used by the Company in 2016. The larger completion design trial led to facility constraints and lower than expected production performance due to apparent over-stimulation of the reservoir. Therefore, the Company has returned to its standard well completion design for the 32 Catarina wells that remain in its 2017 development plan. 

At Maverick, the Company has drilled 22 wells on the Hausser lease. Completion activity on these wells began late in the second quarter and is expected to continue through the third quarter 2017. 

At Comanche, the Company brought on-line 42 horizontal wells in the second quarter, all part of the large inventory of drilled but uncompleted ("DUC") wells acquired in the transaction that closed on March 1, 2017. Within 45 days of closing, 9 DUCs, relatively short in lateral length (approximately 4,400 feet) had been completed and brought on-line in Area 3. In the middle of the second quarter, four horizontal wells with an average lateral length of approximately 10,000 feet at Stumberg Ranch were brought on-line in Area 3. Sanchez Energy brought on-line an additional 29 horizontal wells with an average lateral length of approximately 6,200 feet at Briscoe Catarina North, also in Area 3 of Comanche. Since the close of the second quarter, an additional 15 DUCs were brought on-line in Area 5 at Briscoe Cochina East Ranch. The Company remains on pace to complete its 132 gross DUC (32 net) inventory within 12 months of closing the Comanche transaction. 

As of June 30, 2017, the Company had 1,975 gross (767 net) producing wells with 154 gross wells in various stages of completion, as detailed in the following table:

         
Project Area   Gross
Producing 
Wells
  Gross Wells
Waiting/Undergoing 
Completion
Catarina   358   21
Comanche   1,477   110
Maverick   42   21
Palmetto   84   2
TMS / Other   14    
Total   1,975   154

PRODUCTION VOLUMES, AVERAGE SALES PRICES, AND OPERATING COSTS PER BOE

The Company's production mix during the second quarter 2017 consisted of approximately 31 percent oil, 32 percent natural gas liquids ("NGL"), and 37 percent natural gas. By asset area, Catarina, Comanche, Marquis, Maverick, and Palmetto/TMS/Other comprised approximately 54 percent, 38 percent, two percent, four percent, and two percent, respectively, of the Company's total second quarter 2017 production volumes.

Revenues of approximately $175.7 million during the second quarter 2017 were up 58 percent compared to the second quarter 2016 and up 31 percent compared to the first quarter 2017 revenue of approximately $133.8 million. Adjusted Revenue for the second quarter 2017, a non-GAAP financial measure that includes $7.2 million in hedging settlement gains was $182.9 million. 

Commodity price realizations during the second quarter 2017, including the impact of hedge settlements, were $47.79 per barrel ("Bbl") of oil, $17.31 per Bbl of NGL, and $3.16 per thousand cubic feet ("Mcf") of natural gas.

Production, average sales prices, and operating costs and expenses per barrel of oil equivalent ("Boe") for the second quarter 2017 are summarized in the following table:

    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
    2017   2016   2017   2016  
Net Production:                          
Oil (MBbl)     2,075     1,634     3,624     3,274  
Natural gas liquids (MBbl)     2,130     1,519     3,501     3,207  
Natural gas (MMcf)     14,814     11,601     25,270     22,497  
Total oil equivalent (MBoe)     6,674     5,087     11,336     10,232  
                           
Average Sales Price Excluding Derivatives(1):                          
Oil ($ per Bbl)   $ 43.90   $ 40.25   $ 45.36   $ 33.13  
Natural gas liquids ($ per Bbl)     17.31     14.47     18.27     11.54  
Natural gas ($ per Mcf)     3.22     2.00     3.21     2.01  
Oil equivalent ($ per Boe)   $ 26.33   $ 21.82   $ 27.31   $ 18.65  
                           
Average Sales Price Including Derivatives(2):                          
Oil ($ per Bbl)   $ 47.79   $ 54.88   $ 47.56   $ 53.79  
Natural gas liquids ($ per Bbl)     17.31     14.47     18.27     11.54  
Natural gas ($ per Mcf)     3.16     2.93     3.07     2.91  
Oil equivalent ($ per Boe)   $ 27.40   $ 28.64   $ 27.68   $ 27.24  
                           
Average unit costs per Boe:                          
Oil and natural gas production expenses(3)   $ 9.72   $ 8.83   $ 9.27   $ 8.76  
Production and ad valorem taxes   $ 1.32   $ 1.22   $ 1.35   $ 0.99  
Depreciation, depletion, amortization and accretion   $ 7.62   $ 8.52   $ 7.42   $ 8.83  
Impairment of oil and natural gas properties   $     $ 17.18   $     $ 10.70  
                           
                           
(1) Excludes the impact of derivative instrument settlements.                          
(2) Includes the impact of derivative instrument settlements.                          
(3) Includes a $3.7 million and $7.4 million non-cash gain for the three and six months ended June 30, 2017,
respectively, and $3.7 million and $7.4 million non-cash gain for the three and six months ended June 30,
2016, respectively, from the amortization of the deferred gain on Western Catarina Midstream divestiture.
         
         

CAPITAL EXPENDITURES

Cash outflows for capital expenditures during the second quarter 2017 totaled approximately $129.6 million. The Company spent approximately 89 percent of its capital expenditures on drilling, completion, infrastructure, and geology and geophysics activities, and 11 percent of its capital expenditures on leasing and business development activities.

FINANCIAL RESULTS

On a GAAP basis, the Company reported net income attributable to common stockholders of $24.2 million for the second quarter 2017, which includes non-cash mark-to-market gains related to hedging activities of $52.4 million and $2.8 million in one-time costs related to the Comanche transaction and other non-recurring items. This compares to the Company's reported net loss attributable to common stockholders of $186.9 million for the second quarter 2016.

The Company's second quarter 2017 Adjusted EBITDA (a non-GAAP financial measure) of approximately $85.1 million was up approximately 68 percent when compared to first quarter 2017 Adjusted EBITDA of $50.6 million. Second quarter 2017 Adjusted EBITDA includes a $3 million expense related to phantom units. The Company's Adjusted Loss (a non-GAAP financial measure) for the second quarter of $22.6 million excludes $52.4 million in non-cash mark-to-market gains related to hedging activities and $2.8 million in one-time costs related to the Comanche transaction and other non-recurring items. The Company's second quarter 2017 results compare to Adjusted EBITDA of approximately $76.5 million and an Adjusted Loss of approximately $2.5 million reported in the second quarter 2016. Adjusted EBITDA and Adjusted Loss are non-GAAP financial measures defined in the tables included with today's news release.

GENERAL AND ADMINISTRATIVE EXPENSE

On a GAAP basis, the Company reported general and administrative ("G&A") expenses of $29.7 million in the second quarter 2017. Included in G&A expenses is $2.8 million in acquisition and divestiture costs, $4.3 million of non-cash equity compensation, and $3 million associated with phantom units that vest periodically in accordance with the terms of the Company's equity-based incentive awards. Excluding these items, G&A expenses during the second quarter 2017 were approximately $19.5 million, which the Company believes is more reflective of its baseline G&A expense.

                       
    Three Months Ended March 31,   Six Months Ended June 30,
    2017   2016   2017   2016
Base general and administrative   $ 19,506   $ 13,685   $ 39,865   $ 29,819
Stock-based compensation - restricted stock (non-cash)     4,335     6,784     16,426     9,595
Stock-based compensation - phantom units     3,024     3,092     13,965     3,627
Acquisition and divestiture costs included in G&A     2,848     422     26,922     422
Total general and administrative   $ 29,713   $ 23,983   $ 97,178   $ 43,463

HEDGING UPDATE

As of Aug. 9, 2017, the Company's hedge position consisted of 21,522 barrels of oil per day ("Bbls/d") and 161,818 million British thermal units of natural gas per day ("MMBtu/d") for the second half of 2017, 17,521 Bbls/d and 186,881 MMBtu/d in 2018, 8,627 Bbls/d and 48,340 MMBtu/d in 2019 and 4,187 Bbls/d and 25,945 MMBtu/d in the first quarter 2020. Additional information on the Company's hedge positions by entity can be found in the Sanchez Energy Investor Presentation posted at www.sanchezenergycorp.com.

LIQUIDITY AND CREDIT FACILITY 

As of June 30, 2017, the Company had liquidity of approximately $560 million, which consisted of approximately $128 million in cash and cash equivalents, an undrawn Sanchez Energy revolving credit facility with a borrowing base of $350 million and an elected commitment amount of $300 million, and $131.5 million of available capacity under a subsidiary-level revolving credit facility, non-recourse to Sanchez Energy, with a borrowing base of $330 million.

SHARE COUNT

As of June 30, 2017, the Company had approximately 82.5 million common shares outstanding. Assuming all Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock were converted, total outstanding common shares as of June 30, 2017 would have been approximately 95 million. For the three months ended June 30, 2017, the weighted average number of unrestricted common shares used to calculate net loss attributable to common stockholders per basic and diluted common share, which are determined in accordance with GAAP, was 76.4 million and 89 million, respectively.

CONFERENCE CALL

Sanchez Energy will host a conference call for investors on Wednesday, Aug. 9, 2017, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time). Interested investors can listen to the call via webcast, both live and rebroadcast, over the Internet at: 
http://edge.media-server.com/m/p/9oge7pxu

ABOUT SANCHEZ ENERGY CORPORATION

Sanchez Energy Corporation (NYSE:SN) is an independent exploration and production company focused on the acquisition and development of U.S. onshore unconventional oil and natural gas resources, with a current focus on the Eagle Ford Shale in South Texas where it has assembled approximately 356,000 net acres. For more information about Sanchez Energy Corporation, please visit our website: www.sanchezenergycorp.com.

FORWARD LOOKING STATEMENTS

This press release contains, and our officers and representatives may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements, including statements relating to the expected financial and operational results of the Company, the expected synergies and benefits related to the Comanche transaction, and the Company's G&A expenses for the remainder of the year. These statements are based on certain assumptions made by the Company based on management's experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model," "strategy," "future," or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including, but not limited to the failure of acquired assets, including the Comanche assets, and our joint ventures (including our partnership with affiliates of the Blackstone Group, L.P.) to perform as anticipated, inability to successfully integrate the various assets acquired by us into our operations, fully identify potential problems with respect to such properties and accurately estimate reserves, production and costs with respect to such properties, failure to continue to produce oil and gas at historical rates, costs of operations, delays, and any other difficulties related to producing oil or gas, the price of oil or gas, marketing and sales of produced oil and gas, estimates made in evaluating reserves, competition, general economic conditions and the ability to manage our growth, our expectations regarding our future liquidity or production, our expectations regarding the results of our efforts to improve the efficiency of our operations to reduce our costs and other factors described in the Company's most recent Annual Report on Form 10-K and any updates to those risk factors set forth in the Company's Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. Further information on such assumptions, risks and uncertainties is available in Sanchez Energy's filings with the U.S. Securities and Exchange Commission (the "SEC"). The Company's filings with the SEC are available on our website at www.sanchezenergycorp.com and on the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events anticipated by the Company's forward-looking statements may not occur, and, if any of such events do occur, Sanchez Energy may not have correctly anticipated the timing of their occurrence or the extent of their impact on its actual results. Accordingly, you should not place any undue reliance on any of the Company's forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

SANCHEZ ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS DATA (unaudited)
(in thousands, except per share amounts)
 
                           
    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
    2017     2016     2017     2016    
REVENUES:                          
Oil sales   $ 91,096     $ 65,786     $ 164,372     $ 108,468    
Natural gas liquid sales     36,873       21,979       63,973       37,024    
Natural gas sales     47,735       23,203       81,201       45,292    
Total revenues     175,704       110,968       309,546       190,784    
OPERATING COSTS AND EXPENSES:                          
Oil and natural gas production expenses     64,848       44,919       105,073       89,612    
Production and ad valorem taxes     8,799       6,188       15,323       10,131    
Depreciation, depletion, amortization and accretion     50,851       43,342       84,057       90,308    
Impairment of oil and natural gas properties             87,380               109,464    
General and administrative (1)     29,713       23,983       97,178       43,463    
Total operating costs and expenses     154,211       205,812       301,631       342,978    
Operating income (loss)     21,493       (94,844 )     7,915       (152,194 )  
Other income (expense):                          
Interest income     150       158       507       483    
Other income (expense)     (6,618 )     211       3,917       (202 )  
Gain on disposal of assets     7,133               12,276            
Interest expense     (35,961 )     (31,822 )     (68,986 )     (63,428 )  
Earnings from equity investments     242       2,179       677       2,691    
Net gains (losses) on commodity derivatives     59,615       (58,750 )     98,496       (35,993 )  
Total other income (expense)     24,561       (88,024 )     46,887       (96,449 )  
Income (loss) before income taxes     46,054       (182,868 )     54,802       (248,643 )  
Income tax benefit     255               1,208            
Net income (loss)     46,309       (182,868 )     56,010       (248,643 )  
Less:                          
Preferred stock dividends     (3,987 )     (3,987 )     (7,974 )     (7,974 )  
Preferred unit dividends and distributions     (10,949 )             (27,415 )          
Preferred unit amortization     (5,282 )             (6,992 )          
Net income allocable to participating securities     (1,893 )             (1,021 )          
Net income (loss) attributable to common stockholders   $ 24,198     $ (186,855 )   $ 12,608     $ (256,617 )  
                           
Net income (loss) per common share - basic   $ 0.32     $ (3.20 )   $ 0.17     $ (4.38 )  
Weighted average number of shares used to calculate net income (loss) attributable to common 
stockholders - basic
    76,395       58,413       73,045       58,575    
                           
Net income (loss) per common share - diluted   $ 0.31     $ (3.20 )   $ 0.17     $ (4.38 )  
Weighted average number of shares used to calculate net income (loss) attributable to common
stockholders - diluted
    89,015       58,413       73,145       58,575    
                           
1) Inclusive of non-cash stock-based compensation expense of $4,335 and $6,784, respectively, for the three months ended June 30, 2017 and 2016,
and $16,426 and $9,595, respectively, for the six months ended June 30, 2017 and 2016.

 

SANCHEZ ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET (unaudited)
(in thousands, except per share amounts)
 
   
    June 30,   December 31,  
    2017     2016    
ASSETS              
Current assets:            
Cash and cash equivalents   $ 128,247     $ 501,917    
Oil and natural gas receivables     67,271       41,057    
Joint interest billings receivables     23,080       496    
Accounts receivable - related entities     5,691       6,401    
Fair value of derivative instruments     38,926            
Other current assets     9,630       12,934    
Total current assets     272,845       562,805    
Oil and natural gas properties, at cost, using the full cost method:              
Proved oil and natural gas properties     4,186,528       3,164,115    
Unproved oil and natural gas properties     477,863       231,424    
Total oil and natural gas properties     4,664,391       3,395,539    
Less: Accumulated depreciation, depletion, amortization and impairment     (2,818,705 )     (2,736,951 )  
Total oil and natural gas properties, net     1,845,686       658,588    
               
Other assets:              
Fair value of derivative instruments     24,067            
Investments (Investment in SNMP measured at fair value of $27.2
million and $26.8 million as of June 30, 2017 and December 31, 2016,
respectively)
    33,851       39,656    
Other assets     41,604       25,231    
Total assets   $ 2,218,053     $ 1,286,280    
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current liabilities:              
Accounts payable   $ 2,784     $ 1,076    
Other payables     3,067       2,251    
Accrued liabilities:              
Capital expenditures     96,336       35,154    
Other     89,083       82,458    
Deferred premium liability             2,079    
Fair value of derivative instruments     2,229       31,778    
Other current liabilities     79,362       22,201    
Total current liabilities     272,861       176,997    
               
Long term debt, net of premium, discount and debt issuance costs     1,893,789       1,712,767    
Asset retirement obligations     31,848       25,087    
Fair value of derivative instruments     1,306       3,236    
Other liabilities     56,387       64,333    
Total liabilities     2,256,191       1,982,420    
Commitments and contingencies (Note 16)              
Mezzanine equity:              
Preferred units ($1,000 liquidation preference, 500,000 units
authorized; 500,000 and zero units issued and outstanding as of
June 30, 2017 and December 31, 2016, respectively)
    409,185            
Stockholders' equity:              
Preferred stock ($0.01 par value, 15,000,000 shares authorized;
1,838,985 shares issued and outstanding as of June 30, 2017 and
December 31, 2016 of 4.875% Convertible Perpetual Preferred
Stock, Series A; 3,527,830 shares issued and outstanding as of
June 30, 2017 and December 31, 2016 of 6.500% Convertible
Perpetual Preferred Stock, Series B)
    53       53    
Common stock ($0.01 par value, 150,000,000 shares authorized;
82,504,903 and 66,156,378 shares issued and outstanding as of
June 30, 2017 and December 31, 2016, respectively)
    829       670    
Additional paid-in capital     1,347,426       1,112,397    
Accumulated deficit     (1,795,631 )     (1,809,260 )  
Total stockholders' deficit     (447,323 )     (696,140 )  
Total liabilities and stockholders' deficit   $ 2,218,053     $ 1,286,280    
               

 

 

SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation Adjusted EBITDA

Adjusted EBITDA is a nonGAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance as compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures. Our Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents a reconciliation of our net loss to Adjusted EBITDA (in thousands).

                                   
    Three Months Ended
June 30,
  Three Months
Ended 

March 31,
  Six Months Ended 
June 30,
   
    2017     2016     2017     2017     2016      
                                   
Net income (loss)   $ 46,309     $ (182,868 )   $ 9,701     $ 56,010     $ (248,643 )    
Adjusted by:                                  
Interest expense     35,961       31,822       33,025       68,986       63,428      
Net losses (gains) on commodity derivative contracts     (59,615 )     58,750       (38,881 )     (98,496 )     35,993      
Net settlements received on commodity derivative contracts (1)     7,177       34,720       (2,904 )     4,273       87,878      
Depreciation, depletion, amortization and accretion     50,851       43,342       33,206       84,057       90,308      
Impairment of oil and natural gas properties             87,380                       109,464      
Stock-based compensation expense (non-cash)     4,335       6,784       12,091       16,426       9,595      
Acquisition and divestiture costs included in general and administrative     2,848       422       24,074       26,922       422      
Income tax benefit     (255 )             (953 )     (1,208 )            
Gain on sale of oil and natural gas properties     (7,133 )             (5,143 )     (12,276 )            
Gain (loss) on embedded derivatives     437               (685 )     (248 )            
(Gain) Loss on investments     8,058               (8,864 )     (806 )          
Amortization of deferred gain on Western Catarina Midstream Divestiture     (3,705 )     (3,703 )     (3,702 )     (7,407 )     (7,406 )    
Interest income     (150 )     (158 )     (357 )     (507 )     (483 )    
                                   
Adjusted EBITDA   $ 85,118     $ 76,491     $ 50,608     $ 135,726     $ 140,556      
                                   
                                   
(1) This amount has been reduced by premiums associated with derivatives that settled during the respective periods, which may include premiums accrued but not yet paid as of the end of the quarter based on timing of cash settlement payments with counterparties.    
   

 

SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation Adjusted Earnings (Loss)

We present Adjusted Earnings (Loss) attributable to common stockholders ("Adjusted Earnings (Loss)") in addition to our reported net income (loss) in accordance with U.S. GAAP. This information is provided because management believes exclusion of the impact of the items included in our definition of Adjusted Earnings (Loss) below will help investors compare results between periods, identify operating trends that could otherwise be masked by these items and highlight the impact that commodity price volatility has on our results. Adjusted Earnings (Loss) is not intended to represent cash flows for the period, nor is it presented as a substitute for net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. The following table presents a reconciliation of our net income (loss) to Adjusted Earnings (Loss) (in thousands, except per share data):

                           
    Three Months Ended
June 30,
  Six Months Ended 
June 30,
 
    2017     2016     2017     2016    
Net income (loss)   $ 46,309     $ (182,868 )   $ 56,010     $ (248,643 )  
Less:                          
Preferred stock dividends     (3,987 )     (3,987 )     (7,974 )     (7,974 )  
Preferred unit dividends and distributions     (10,949 )             (27,415 )          
Preferred unit amortization     (5,282 )             (6,992 )          
Net income (loss) attributable to common shares and participating securities     26,091       (186,855 )     13,629       (256,617 )  
Plus:                          
Net losses (gains) on commodity derivatives contracts     (59,615 )     58,750       (98,496 )     35,993    
Net settlements received on commodity derivative contracts (1)     7,177       34,720       4,273       87,878    
Impairment of oil and natural gas properties             87,380               109,464    
Stock-based compensation expense (non-cash)     4,335       6,784       16,426       9,595    
Acquisition and divestiture costs included in general and administrative     2,848       422       26,922       422    
Gain on sale of oil and natural gas properties     (7,133 )             (12,276 )          
(Gain) Loss on embedded derivatives     437               (248 )          
(Gain) Loss on investments     8,058               (806 )          
Amortization of deferred gain on Western Catarina Midstream Divestiture     (3,705 )     (3,703 )     (7,407 )     (7,406 )  
Tax impact of adjustments to net loss (2)     (1,049 )             (1,578 )          
Adjusted Loss     (22,556 )     (2,502 )     (59,561 )     (20,671 )  
Adjusted Loss allocable to participating securities (3)                                  
Adjusted Loss attributable to common stockholders   $ (22,556 )   $ (2,502 )   $ (59,561 )   $ (20,671 )  
                           
Weighted average number of shares used to calculate income (loss) attributable to 
common stockholders - basic and diluted
    76,395       58,413       73,045       58,575    
                           
                           
                 
(1) This amount has been reduced by premiums associated with derivatives that settled during the
respective periods, which may include premiums accrued but not yet paid as of the end of the quarter
based on timing of cash settlement payments with counterparties.
             
(2) The tax impact is computed by utilizing the Company's effective tax rate on the adjustments to
reconcile net income (loss) to Adjusted Loss.
             
(3) The Company's restricted shares of common stock are participating securities.              

 

SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation Adjusted Revenue

We present Adjusted Revenue in addition to our reported Revenue in accordance with U.S. GAAP. The Company defines Adjusted Revenue as follows: total revenues plus cash settled derivatives. The Company believes Adjusted Revenue provides investors with helpful information with respect to the performance of the Company's operations and management uses Adjusted Revenue to evaluate its ongoing operations and for internal planning and forecasting purposes. See the table below which reconciles Adjusted Revenue and total revenues.

                         
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Total Revenues   $ 175,704   $ 110,968   $ 309,546   $ 190,784
Net settlements received on commodity derivative contracts (1)     7,177     34,720     4,273     87,878
Adjusted Revenue   $ 182,881   $ 145,688   $ 313,819   $ 278,662
                         
     
(1) This amount has been reduced by premiums associated with derivatives that settled during the respective periods, which may include premiums accrued but not yet
paid as of the end of the quarter based on timing of cash settlement payments with counterparties.

 


Search Data From Sanchez Energy Corp Latest Presentations

Key Slides found in this Presentation
        
Acquisitions & Divestitures
        Transaction Details
        Transaction Metrics
Capital & Finance
        Operating Costs (LOE)
        Hedging
        Rates of Return/ IRR
        Capital Expenditures
        Debt Maturity Schedule
        Break-Even
Data & Charts
        Type Curve
        Bar Chart
        Peer Comparison
Geology & Geoscience
        Depth - TVD
        Well / Type Log(s)
Land & Legal
        Locations/Inventory
        Acreage & Land
Maps
        Leasehold Map
        Portfolio Map
        All Maps
        Areas of Operations
Midstream
        Pipelines & Facilities
        Crude Oil Gathering
Portfolio & Operations
        Resources Potential
        Corporate Production Rates
        Production Mix / Split
        Proved Reserves
        Drilling Program
        IP Rates 30-Day
        IP Rates
        Drilling - Wells Drilled
        Production Rates
Production2
        Cumulative Production
Well Information
        Well EUR
        Well Cost
        Frac Design - Frac Stages
        Frac Design - Stage Spacing
        Well Lateral Length
        Frac Design - Proppant Loading
        Frac Design
        Well Spacing


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