Sanchez Energy Corp (NYSE:SN) Doubles Holding With Eagle Ford Shale Properties For $639 Million

Steve Hackney - May 29, 2014

Boston, MA 05/29/2014 (wallstreetpr) – Sanchez Energy Corp (NYSE:SN), the oil and gas explorer, has increased its holding in the Eagle Ford shale properties by almost twice it after it acquired from Royal Dutch Shell plc (ADR) (RDS.A) for $639 million.

Doubled Holding

The Houston based explorer had earlier announced its intention to acquire 106,000 net acres of the gasfield, post which the company’s shares had moved up 9% last week. The company is to acquire 100% working interest along with a 75% net revenue interest in the purchased properties which include land in Webb Counties, Texas and Dimmit, LaSalle. Sanchez Energy Corp (NYSE:SN), said that the assets brought it 60 million barrels of oil equivalent. In the first quarter, these assets resulted in the production of as many as 24,000 barrels of oil equivalent a day. The acquisition is intended to be backdated to Jan.1 and provides the company as many as 200 low risk locations for drilling with rates of return in the range of 35% and 50%. In addition, it also comes with 800 potential drilling locations which would lead Sanchez to have around 3,000 wells.

Shares Surge

The step has resulted in almost doubling of Sanchez Energy Corp (NYSE:SN)’s land to 226,000 acres, which makes Sanchez the fifth largest public lease holding company. It also increased the company’s reserves to as many as 119 million barrels of oil equivalent while production increased to approximately 49,000 a day.

Sanchez continues to prosper as the energy boom in the U.S. surges, marking oil prices over $100 per barrel. It forms part of the Oil & Gas- the U.S. Production and Exploration group, which ranks third among the 197 industry groups tracked by IBD.

 BMO Capital increased it price target on the company’s stock from $36 to $40 after the acquisition, while rating Sanchez Energy Corp (NYSE:SN)’s shares as ‘outperform.’ On Wednesday, its shares surged almost 3.3% after this announcement.

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Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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