Sanchez Reports Strong 2015

February 29, 2016 Elizabeth Alford

Chesapeake Released 2015 Q1 — Sanchez Energy 2016

Sanchez Energy ended 2015 with record production in the Eagle Ford and $435 million in cash, despite the difficult downturn.

While many producers in the oil and gas industry are struggling to stay afloat, Sanchez Energy Corporation has been able to position itself for strength during this difficult time. During a recent earnings call last week, company executives cited some core competitive advantages that have helped them move forward.

Highlights for 2015 include a record annual production of 19.2 MMBoe an increase of 72% over 2014 and a 37% reduction in capital expenditures over 2014.

“2015 was a strong year for Sanchez Energy despite the most challenging commodity environment we have faced as a Company,” said Tony Sanchez, III, Chief Executive Officer ofSanchez Energy. “In addition, our operations delivered exceptional results on all fronts in terms of both increased well productivity and continued cost reductions.”

2015 Eagle Ford Highlights

Expanded inventory in our Catarina and Cotulla assets.
Increase well performance through advancements in our completion designs
Reduced well costs by more than 55%
Catarina and Cotulla were now delivering total well costs of less than $3.5 million
Record production of 5.3 million barrels of oil equivalent ("MMBoe")
Phase 1 of the high-pressured gas gathering line is scheduled to be in service near the end of the first quarter
Construction of the gas processing plant has also started and is still on track for an estimated completion in early 2017

In 2016, Sanchez has set a capital expenditure budget between $200 million to $250 million and plans to spend 89% on drilling and completions in the Eagle Ford. The company also plans to drill 52 net wells and complete 55 net wells in the region. The company expects to reduce the Eagle Ford rigs from three to one at the end of the second quarter.

“While we can’t control oil prices, we can control what we spend and where we drill and it’s something that is a daily focus for everyone in our organization.”

— Gleeson Van Riet, CFO

Eagle Ford Rig Count Falls Below 60

February 26, 2016 Elizabeth Alford

The Eagle Ford Shale rig count is continuing to fall rapidly with Baker Hughes reporting 53 rigs running across our coverage area by midday Friday, a drop of nine rigs since last week.

In recent Eagle Ford news, Marathon Oil plans to spend $1.4 billion with $600 million set aside for Eagle Ford. Most of that amount, ($520 million) will be used for drilling and completions.

A total of 502 oil and gas rigs were running across the United States this week, which is a drop of 12 over last week. 102 were targeting natural gas (1 more than the previous week) and 400 were targeting oil in the U.S. (13 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)231 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table below.

Eagle Ford Oil & Gas Rigs

Natural gas rigs increased in the Eagle Ford to six this week as natural gas prices remained stable, trading at $1.79/mmbtu, a $.01 decrease from the previous week.

The Eagle Ford oil rigs dropped by 10 to 47 with WTI oil prices ending the week at $32.76, an increase of $3.12. A total of 49 rigs are drilling horizontal wells, zero are drilling directional wells, and four are vertical rigs.

Karnes County fell by two this week but continues to lead the region in development with 12 running rigs. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Cabot Reduces Spending & Activity in Eagle Ford

Marathon Oil: 42% of 2016 Budget to Stay in the Eagle Ford

Chesapeake Will Release all Eagle Ford Rigs

Comstock: Eagle Ford Not ‘Drillable’ in this Market

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Comstock: Eagle Ford Not 'Drillable' in this Market

February 25, 2016 Elizabeth Alford

Comstock Resources announced it will focus 2016 resources on its natural gas assets while reducing spending on the 'un-drillable' Eagle Ford Shale region.

In an earnings call this morning, Comstock discussed its 2015 full year results and plans for 2016. Fourth quarter highlights included production volumes of 14.9 billion cubic feet of natural gas and 493,300 barrels of oil. This is an increase of 65% for natural gas over the 2014 Q4.

For its Eagle Ford operations, Comstock completed four horizontal Eagle Ford shale wells (2.2 net) in South Texas which were drilled in 2014 and installed artificial lift on many of the wells in that field. Spending in the region included $42.6 million on the company's Eagleville properties.

In 2016, Comstock plans to focus on its natural gas assets, leaving only a small portion of its budget for the oil rich has allocated $7.3 million for activity in the Eagle Ford Shale.

“Make note that about it, we’re a natural gas company, focused on natural gas with a stellar oil position in the South Texas Eagle Ford, that is HBP, but not really drillable in the oil market that we all live in, versus our Haynesville/Bossier play, we have optionality that is very unusual in this current distressed E&P market.”

— M. Jay Allison - Chairman & CEO

Chesapeake Will Release all Eagle Ford Rigs

February 24, 2016 Elizabeth Alford

Chesapeake Energy announced year end results and revealed plans to reduce spending by $200 million in 2016.

In an earnings call this morning, Chesapeake Energy executives discussed how they made 'significant' progress in 2015 with average production of approximately 679,200 boe per day, an increase of 8% year over year. The company reported a net loss of $0.20 per fully diluted share and 2015 adjusted ebitda of $2.385 billion

Cost cuts were strategic in 2015 with the company highlighting that they reduced production costs on a per barrel of oil equivalent by 10% compared to 2014 plus reduced general and administrative costs per barrel oil equivalent by 24% in 2015.

Moving forward for 2016, Chesapeake has planned 2016 total capital expenditures ranging from $1.3 to $1.8 billion, approximately 57% lower than 2015 levels

Eagle Ford Operations

Chesapeake has 1.1 billion boe of net recoverable resources in the Eagle Ford and runs approximately 20 rigs and six hydraulic fracturing crews in the play. Hihglights for 2015 include:

Production averaged approximately 97 thousand barrels of oil equivalent (mboe) per day (210 gross operated mboe per day) during the 2015 fourth quarter (10% decrease)
Average completed well costs (through October) are $5.4 million ($5.9 million in 2014)
Average completed lateral length of 6,250 feet and 23 frac stages (5,850 feet and 18 frac stages in 2014)
18 wells placed on production during Q4, compared to 123 wells in the 2014 Q4
Plans to place approximately 170 to 180 wells on production in 2016
The operated rig count in the Eagle Ford averaged three rigs in the 2015 fourth quarter, and the company anticipates releasing all operated rigs in the area by June

“Our tactical focus areas remain asset divestitures, of which we are pleased to have approximately $500 million in net proceeds closed or under signed sales agreements, liability management and open market purchases of our bonds. We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions, aggressively working to minimize the decline of our base production and making shorter-cycle investments with our 2016 capital program. We have set our initial capital program for the year at $1.3 to $1.8 billion, including capitalized interest, and will remain flexible to raise or lower based on commodity prices.”

— Doug Lawler, Chesapeake's Chief Executive Officer

Cabot Reduces Spending & Activity in Eagle Ford

February 23, 2016 Elizabeth Alford

Eagle Ford producer, Cabot Oil and Gas, announced last year's earnings, boasting double-digit reserve and production growth for 2015.

In a recent earnings call, Cabot reported full 2015 production increases across the board including 566.0 billion cubic feet of natural gas, 5.4 million barrels of crude oil and condensate, and 667,000 barrels of natural gas liquids. The company also reported a 7% decrease in operating expenses from$2.56 per Mcfe in 2014 to $2.37 per thousand cubic feet equivalent (Mcfe) in 2015.

Eagle Ford Operations

Cabot executives said that the company's Eagle Ford operations experienced an exceptional 2015 with the following highlights:

Reducing the spud-to-TD drilling days for a 7,700 foot lateral to eight days.
45% reduction in drilling cost relative to 2014
Longest lateral drill to date of 11,588 feet in 11.6 days from spud to TD with the total measured depth of 19,930 feet.
The company's one utilized rig ranked second in total footage drilled among 200 rigs throughout all basins in 2015.

“We do anticipate an and we believe our 86,000 net acres in the Eagle Ford can provide for long-term value creation in a slightly more favorable price environment. As a result our focus in 2016 is to reduce our operating activity to the minimum levels needed to ensure we maintain all our core acreage.”

— Mr. Dan Dinges, Chairman, President and CEO

For 2016, Cabot has allocated 30% of its drilling budget for the Eagle Ford Shale and plans to drill 5 net wells and complete 15 net wells.

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Eagle Ford Oil & Gas Rigs

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

What is the Rig Count?