Sanchez Energy Reports Strong Q1

Sanchez Energy Released 2015 Q1

Sanchez Energy announced a strong start to 2015 during it's conference call last week, reporting they have reached new milestones for production and cost structures.

For the first quarter of 2015, Sanchez saw record production averaging 45,217 barrels of oil equivalent per day during the quarter and reported they are currently producing approximately 50,000 barrels per day. Completed well costs in all of regions of the company's Eagle Ford operations (Catarina, Marquis and Cotulla/Wycross) are below $5.0 million, and are anywhere from 30% to 40% below costs from Q4’14.

A huge factor in Sanchez growth and success in the Eagle Ford is due to their acquisition of 106,000 acres in Catarina, TX from Dutch Shell last year. Catarina accounted for 60% of the company’s production in Q1’15.

Read more: Sanchez Nearly Doubles Eagle Ford Acreage in $639 Million Deal

“At the time of our IPO in December of 2011, we had production of approximately 600 barrels of oil equivalent per day. Since that time, through a combination of organic growth and strategic acquisitions, we have now grown production to approximately 50,000 barrels of oil equivalent per day and at our current pace, have well over a decade of high return drilling opportunities in our inventory.”

— Christopher D. Heinson - Chief Operating Officer and Senior Vice Presiden

Q1 Eagle Ford Highlights

• Record production averaging approximately 45,217 BOE/D
• Executed and closed the sale of escalating working interests in 59 producing wellbores in the non-operated Palmetto Field for aggregate consideration of approximately $85 million
• Catarina: Exceeded our first annual 50 well drilling commitment, by drilling 54 wells.
• Catarina: successfully appraised three distinct and productive benches
• Well costs trending down across assets, and we are now drilling and completing wells at Catarina,Cotulla, and Marquis at a cost that is approximately 30 to 40% below well costs realized in the fourth quarter 2014, with drilling and completion costs at Catarina now trending below $4.5 million.

Read more at sanchezenergycorp.com

Noble Energy Plans Expansion into Eagle Ford

Rosetta-Noble Merger

Houston-based Noble Energy announced Monday it plans to get into the shale business by acquiring independent producer, Rosetta Resources. The $2.1 billion deal will allow Noble to move into over 100,000 Texas acres including 50,000 in the Eagle Ford.

After months of instability due to low and fluctuating crude prices, this deal is significant because it reveals a renewed confidence in the industry and the tenacity and resilience of U.S. producers. Many also believe it may be a tipping point for future mergers.

“It is possible the merger of these two shale drillers will ultimately aid a rebound in oil prices. For now, though, it demonstrates the exploration-and-production sector’s ability to keep going in adverse conditions.”

— The Wall Street Journal

Rosetta is a leading producer in the The Eagle Ford and reported 2015 Q1 production at 58.4 MBoe/d, a 17% increase from the same period last year.  Also during the quarter, the company spent $67.8 million for drilling and completion activity: they drilled three wells were drilled, 14 completed and 11 were brought on production.

“I am excited to announce this strategic transaction which adds two exceptional and material areas to our global portfolio. The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S., which will expand our resource base and development inventory and further diversify our portfolio.”

— Dave Stover, Noble Energy's Chairman, CEO, and President

Chesapeake Energy Reveals Huge Q1 Loss

Chesapeake Released 2015 Q1

Chesapeake Energy released first quarter financial and operational results this week, reporting a net loss of $3.8 billion and boasting of new technological innovations.

Related: Chesapeake to Reduce Spending by $500 Million

Chesapeake's loss is even more staggering when compared to the company's net income of $374 million one year ago. The company plans to slash drilling and completions over the rest of the year. They expects to complete fewer than 50 wells in the fourth quarter of 2015 and will drop their rig count from 40 down to about 15.

Optimism

In spite of huge losses, CEO Yet Doug Lawler remained upbeat during the earning call last Wednesday and stayed focused Chesapeake's innovation.

“We are making it public about some of this technology and improvements that we see in our assets adding 600 to 700 locations in the Eagle Ford, adding locations in other areas because of our capital efficiency, seeing the improvements in the Powder River. These are dynamite things, guys. Dynamite things.”

— Doug Lawler

Eagle Ford Update

For the first quarter of 2015, Eagle Ford net production averaged approximately 113 thousand barrels of oil equivalent (mboe) per day, an increase of 7%. Other highlights include:

• Well cost-reductions: the company anticipates completed well costs of $5.5 million by year-end 2015
• Successfully drilled five wells with laterals in excess of 10,000 feet
• Successfully completed down spacing tests in various sections of its acreage, adding 600 – 700 incremental locations to its undrilled inventory
• Plans to test its first Upper Eagle Ford well in the 2015 fourth quarter
•  The drilling team broke several records including drilling their deepest well with a total measured depth of just under 21,000 feet, fastest spud-to-rig-release time of 7.8 days, and lowest drilling cost well at $1.1 million

“Due to market conditions, we continue to ramp down activity in the area. We reduced our rig count from 20 rigs in January to a current count of seven with the expectation to get to just three rigs by July. Strategically, we are going to take advantage of this ramp down in activity to further enhance our development planning.”

— Mikell J. Pigott, Executive Vice President-Operations

Chesapeake made other Eagle Ford news this year when Dimmett County property owner James Birkner filed a lawsuit against the company claiming that a Chesapeake employee hunted, killed and removed the white-tailed deer that roamed his property. 

Read more: Chesapeake Lawsuit Adds to Legal Trouble

Read the full press release at chk.com and seekingalpha.com

photo: © Larryhw |  Quarterly Financial Report Photo

EOG On Track With 2015 Spending Plan

EOG will resume fracking

EOG Resources released its first quarter earnings and operations report this week with hints about when they will return to fracking wells.

Citing low commodity prices, EOG announced a first quarter net loss of $169.7 million. They remain on track with their plans for a 40% capex decrease and are making substantial progress in reducing costs through operational efficiencies and service cost reductions.

85% of EOG’s spending for 2015 is allocated for the Eagle Ford, Delaware Basin, and Bakken. Their strategy is to continue drilling, but defer completions on a significant number of wells until oil prices improve. As oil prices recover, EOG predicts it will begin to begin fracking wells later this year when prices stabilize at around $65.

In an earnings conference call on Tuesday, Chairman and CEO, Bill Thomas announced that the first quarter results were “right on track” and that they are “quickly transforming the company to be successful in this low price environment.” Thomas went on to lay out the four basic objectives to EOG’s 2015 plan:

1. Maximize 2015 returns on capital invested and position the company to resume strong growth when oil prices recover
2. Focus on improving well productivity and operational efficiencies
3. Protect the balance sheet by meeting our cash flow and CapEx expectations for the year
4. Take advantage of opportunities during the down cycle to add acreage

“We are using our exploration skills to define high quality acreage and are having good success capturing leasehold interest in emerging plays. Competition is down, acreage is available, and leasing costs are low compared to previous years, and we are optimistic more opportunities will materialize as the year progresses.”

— Bill Thomas

EOG will reduce rigs in the Eagle Ford this year to 15 from 23 at year-end 2014 and will complete about 345 net wells. The company has  reduced completed well costs by 10% from an industry-leading $6.1 million average well cost in 2014 to a current well cost of $5.5 million.