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Sanchez Sees 'Challenging' Q2; Edits Well Design to Improve Performance

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   |    Tuesday,August 28,2018

Sanchez Energy reported its Q2 2018 results.

Tony Sanchez, III, Chief Executive Officer of Sanchez Energy, said: "The second quarter 2018 was a challenging operational quarter at Comanche, as we continued to see higher than projected production declines from wells brought on-line during the second half of 2017 and early 2018. As discussed last quarter, the key issues leading to these decline rates include: (1) poor Upper Eagle Ford well performance in several of the delineation and step-out areas, (2) the testing of a more aggressive flowback strategy that resulted in well decline rates in excess of legacy well production profiles, (3) the use of hybrid completion designs, and (4) tighter spacing of the drilled-but-uncompleted wells acquired with the Comanche acquisition."

Comanche - Tries New Quad Stacked / Slickwater Design to Improve Results

The Company drilled ten horizontal wells in the Briscoe Metcalf area of Comanche at the end of the first quarter 2018 in a "quad stacked" pattern that targeted both the Lower and Upper Eagle Ford shale using a new generation high volume, high rate slickwater completion design.

• The wells have continued to outperform the Company's type curve forecast for this area with average 30-day and 90-day production rates of approximately 1,368 Boe/d and 1,135 Boe/d, respectively.

A significant amount of the Company's completion activity at Comanche in the second quarter 2018 was focused on the Diamond H Ranch in the western portion of Area 5. During the second quarter, Sanchez Energy placed 19 gross wells on-line at the Diamond H Ranch. While still early, the Lower Eagle Ford Diamond H Ranch wells are performing in-line with expectations. All of the Diamond H Ranch wells used a high volume, high rate slickwater completion design and were placed on-line with a conservative flow back strategy.

Catarina

At Catarina, the Company brought eight E31 and E32 wells on-line in the South Central area of the asset during the second quarter 2018. The wells are performing in-line with expectations, with average 30-day production rates of approximately 1,200 Boe/d.

Additionally, the Company brought three North Central wells on-line late in the second quarter 2018 that are performing in-line with expectations. To date, the Company has drilled and completed 19 North Central wells. With the Company's drilling success in North Central Catarina, Sanchez Energy has de-risked its entire drilling inventory on the western and central portions of its Catarina asset.

Production Stays Relatively Consistent:

- Q2 production of 79.5 MBOEPD (down -3% from 1Q18 and up nearly +9% YOY)

- During the second quarter 2018, the Company drilled 57 gross (33 net) wells and completed 41 gross (28 net) wells. The Company brought 49 gross wells on-line, 27 at Comanche and 22 at Catarina, during the quarter.