Sanchez Energy Corp (NYSE:SN) Q3 2017 Production Surged 43%

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Tony Sanchez, III, the CEO of Sanchez Energy Corp (NYSE:SN), expressed that as previously announced, third quarter production surged 43% over Q3 2016, which came at the high end of their projection range for the quarter. The company has increased to a remarkable rate in surplus of 80,000 Boe/d in the initial part of Q4 2017 as it brings on-line increased wells in the Eagle Ford.

Besides establishing a new production record, the firm’s Adjusted EBITDA jumped by around $11.8 million, or 14%, over Q2 2017 performance and $17.6 million, or 22%, when compared to Q3 2016. Just as vital, the firm’s operating margins surged during Q3 2017 following a jump in pricing and reduced per unit operating costs.

The highlights

The CEO of Sanchez added that operating and capital focus has moved to prioritize returns on invested capital and moving towards free cash flow generation. With a continuing focus on increased rate of return assignments that enhance capital efficiency, they have reduced the pace of drilling activity and lowering the large inventory of DUCs bought with the Comanche assets. The firm’s inventory of low-cost DUCs should continue to lead cash flow growth as the company close 2017 and plan for upcoming year.

Increased operating margins and higher production levels together with enhancing oil price fundamentals, should put Sanchez on a path to fund the firm’s 2019 capital plan with operating cash flows and offering growth from a strong inventory of organic drilling prospects. As 2017 comes to a close, they anticipate capital spending to come in a range of $525 million to $550 million for FY2017.

The jump in capital spending when assessed to previous projection is an outcome of around $20 million in enhanced completions, leasing, service cost inflation and longer laterals. The big majority of leasing performed this year was linked with Sanchez’s Javelina acreage position.

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