HOUSTON, Aug. 09, 2017 (GLOBE NEWSWIRE) -- Sanchez Energy Corporation (NYSE:SN) (“Sanchez Energy” or the
“Company”), today announced operating and financial results for the second quarter 2017. Highlights include:
- Second quarter 2017 production totaled approximately 6.7 million barrels of oil equivalent (“MMBoe”), or approximately
73,341 barrels of oil equivalent per day (“Boe/d”), an increase of approximately 43 percent over first quarter 2017
production;
- Four Lower Eagle Ford horizontal wells, with an average lateral length of approximately 10,000 feet, that were brought
on-line at the Stumberg Ranch during the second quarter 2017 achieved an average 30-day production rate of approximately 1,950
Boe/d, which is approximately 20 percent above the type curve after normalizing for lateral length;
- Second quarter 2017 revenues were approximately $175.7 million, an increase of approximately 31 percent over the first
quarter 2017;
- Adjusted Revenue (a non-GAAP financial measure), inclusive of hedge settlements, was approximately $182.9
million during the second quarter 2017;
- The Company reported net income of $46.3 million during the second quarter 2017 compared to $9.7 million during the first
quarter of 2017 and Adjusted EBITDA (a non-GAAP financial measure) of approximately $85.1 million during the second quarter 2017,
which was up approximately 68 percent when compared to the first quarter 2017;
- The Company raised approximately $67 million in cash during the second quarter through the sale of its Marquis asset,
remaining Cotulla assets, and 10 percent interest in Silver Oak II Gas Processing Facility; and
- As of June 30, 2017, the Company had approximately $560 million in liquidity, with approximately $128 million in cash and
cash equivalents and approximately $432 million of combined borrowing capacity under the Company’s two bank credit
facilities.
MANAGEMENT COMMENTS
“The second quarter 2017 marked our first full quarter with the newly acquired Comanche assets,” said Tony
Sanchez, III, Chief Executive Officer of Sanchez Energy. “Since closing the Comanche transaction on March 1, 2017, we have
been able to utilize our completion methods on the newly acquired acreage to drive excellent results, contributing to a production
increase of 43 percent over the prior quarter. As previously reported, based on available data for Dimmit County we believe
our most recent Stumberg Ranch horizontal wells at Comanche are achieving record production levels, with the Stumberg Ranch 55H
well showing a 24-hour initial production rate of approximately 3,800 Boe/d and oil-weighing of approximately 72 percent.
Given the well’s production results, the Stumberg Ranch 55H appears on pace to achieve payout in only 12 months at current
strip pricing. On average, the four long horizontal wells at Stumberg Ranch achieved 30-day production rates of 1,950
Boe/d. These strong production results, combined with our focus on well costs, allow us to deliver solid rates of return on
our drilling activities, even in today’s challenging commodity price environment.
“Driven by the positive impact of the Comanche transaction, our second quarter 2017 Adjusted EBITDA increased
more than 68 percent over the prior quarter. We achieved this level of financial performance despite the impact of the large
completion trials at Catarina, which did not provide the production response we expected. As we disclosed in our operational
update last month, we have returned to our standard well completion design for the 32 Catarina wells that remain in our 2017
development plan, and now expect to reach our production growth expectations of 90,000 Boe/d to 100,000 Boe/d in the first half of
2018. We also anticipate that cash margins will improve throughout the second half of 2017 and into 2018, as increases in
production will tend to reduce our costs on a per unit basis.
“Given the current operating environment, we remain focused on maintaining adequate liquidity to execute our
drilling plans. With that in mind, we raised approximately $67 million during the quarter from the sale of our Marquis asset,
remaining Cotulla assets, and 10 percent interest in Silver Oak II Gas Processing Facility, resulting in a cash balance of $128
million as of June 30, 2017 and total liquidity, including borrowing capacity under our two credit facilities, of approximately
$560 million. Additionally, in July 2017 we announced our intention to reduce our 2018 capital spending by
approximately $75 million to $100 million, compared to our original $500 million guidance, in order to better align capital
spending with operating cash flow, while remaining focused on higher rate of return projects that optimize capital
efficiency. This reduction in capital spending, together with our strong liquidity position and bank of 30 wells against our
2017-18 Catarina drilling commitment, provides us with a considerable amount of financial and operating flexibility as we look to
execute our plans over the next 12 to 18 months, and drive shareholder value.”
OPERATIONS UPDATE
During the second quarter 2017, the Company spud 48 gross (33.9 net) wells and completed and turned on-line 63
gross (27 net) wells. Sanchez Energy brought on-line 42 wells at Comanche, 11 wells at Catarina, 6 wells at Maverick and four
non-operated wells. As of June 30, 2017, the Company had drilled 68 wells, surpassing the 50 well annual drilling commitment
at Catarina that ran from July 1, 2016 to June 30, 2017. With 18 wells above the drilling commitment, and a bank of wells
carried over from previous year’s drilling commitment, Sanchez Energy has banked the maximum allowable 30 wells as of June 30,
2017, which can be used towards the next annual drilling commitment that runs from July 1, 2017 through June 30, 2018.
The cost of wells completed at Catarina during the second quarter 2017 averaged approximately $3.9 million per
well as the Company tested significantly enhanced completion designs. The Catarina wells were completed with proppant loading
of approximately 3,000 pounds per foot of proppant, which is 70 percent more proppant and fluids when compared to well designs used
by the Company in 2016. The larger completion design trial led to facility constraints and lower than expected production
performance due to apparent over-stimulation of the reservoir. Therefore, the Company has returned to its standard well
completion design for the 32 Catarina wells that remain in its 2017 development plan.
At Maverick, the Company has drilled 22 wells on the Hausser lease. Completion activity on these wells
began late in the second quarter and is expected to continue through the third quarter 2017.
At Comanche, the Company brought on-line 42 horizontal wells in the second quarter, all part of the large
inventory of drilled but uncompleted (“DUC”) wells acquired in the transaction that closed on March 1, 2017. Within 45 days
of closing, 9 DUCs, relatively short in lateral length (approximately 4,400 feet) had been completed and brought on-line in Area
3. In the middle of the second quarter, four horizontal wells with an average lateral length of approximately 10,000
feet at Stumberg Ranch were brought on-line in Area 3. Sanchez Energy brought on-line an additional 29 horizontal wells with
an average lateral length of approximately 6,200 feet at Briscoe Catarina North, also in Area 3 of Comanche. Since the close of the
second quarter, an additional 15 DUCs were brought on-line in Area 5 at Briscoe Cochina East Ranch. The Company remains on
pace to complete its 132 gross DUC (32 net) inventory within 12 months of closing the Comanche transaction.
As of June 30, 2017, the Company had 1,975 gross (767 net) producing wells with 154 gross wells in various
stages of completion, as detailed in the following table:
|
|
|
|
|
Project
Area |
|
Gross
Producing
Wells |
|
Gross
Wells
Waiting/Undergoing
Completion |
Catarina |
|
358 |
|
21 |
Comanche |
|
1,477 |
|
110 |
Maverick |
|
42 |
|
21 |
Palmetto |
|
84 |
|
2 |
TMS / Other
|
|
14 |
|
— |
Total |
|
1,975 |
|
154 |
PRODUCTION VOLUMES, AVERAGE SALES PRICES, AND OPERATING COSTS PER BOE
The Company’s production mix during the second quarter 2017 consisted of approximately 31 percent oil, 32
percent natural gas liquids (“NGL”), and 37 percent natural gas. By asset area, Catarina, Comanche, Marquis, Maverick, and
Palmetto/TMS/Other comprised approximately 54 percent, 38 percent, two percent, four percent, and two percent, respectively, of the
Company’s total second quarter 2017 production volumes.
Revenues of approximately $175.7 million during the second quarter 2017 were up 58 percent compared to the
second quarter 2016 and up 31 percent compared to the first quarter 2017 revenue of approximately $133.8 million. Adjusted
Revenue for the second quarter 2017, a non-GAAP financial measure that includes $7.2 million in hedging settlement gains was $182.9
million.
Commodity price realizations during the second quarter 2017, including the impact of hedge settlements, were
$47.79 per barrel (“Bbl”) of oil, $17.31 per Bbl of NGL, and $3.16 per thousand cubic feet (“Mcf”) of natural gas.
Production, average sales prices, and operating costs and expenses per barrel of oil equivalent (“Boe”) for the
second quarter 2017 are summarized in the following table:
|
|
Three Months Ended |
|
Six Months Ended
|
|
|
|
June
30, |
|
June 30, |
|
|
|
2017 |
|
2016 |
|
2017
|
|
2016
|
|
Net Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbl) |
|
|
2,075 |
|
|
1,634 |
|
|
3,624 |
|
|
3,274 |
|
Natural gas liquids (MBbl) |
|
|
2,130 |
|
|
1,519 |
|
|
3,501 |
|
|
3,207 |
|
Natural gas (MMcf) |
|
|
14,814 |
|
|
11,601 |
|
|
25,270 |
|
|
22,497 |
|
Total oil equivalent (MBoe) |
|
|
6,674 |
|
|
5,087 |
|
|
11,336 |
|
|
10,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Excluding
Derivatives(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($ per Bbl) |
|
$ |
43.90 |
|
$ |
40.25 |
|
$ |
45.36 |
|
$ |
33.13 |
|
Natural gas liquids ($ per Bbl) |
|
|
17.31 |
|
|
14.47 |
|
|
18.27 |
|
|
11.54 |
|
Natural gas ($ per Mcf) |
|
|
3.22 |
|
|
2.00 |
|
|
3.21 |
|
|
2.01 |
|
Oil equivalent ($ per Boe) |
|
$ |
26.33 |
|
$ |
21.82 |
|
$ |
27.31 |
|
$ |
18.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Including
Derivatives(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($ per Bbl) |
|
$ |
47.79 |
|
$ |
54.88 |
|
$ |
47.56 |
|
$ |
53.79 |
|
Natural gas liquids ($ per Bbl) |
|
|
17.31 |
|
|
14.47 |
|
|
18.27 |
|
|
11.54 |
|
Natural gas ($ per Mcf) |
|
|
3.16 |
|
|
2.93 |
|
|
3.07 |
|
|
2.91 |
|
Oil equivalent ($ per Boe) |
|
$ |
27.40 |
|
$ |
28.64 |
|
$ |
27.68 |
|
$ |
27.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit costs per Boe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas production expenses(3) |
|
$ |
9.72 |
|
$ |
8.83 |
|
$ |
9.27 |
|
$ |
8.76 |
|
Production and ad valorem taxes |
|
$ |
1.32 |
|
$ |
1.22 |
|
$ |
1.35 |
|
$ |
0.99 |
|
Depreciation, depletion, amortization and accretion |
|
$ |
7.62 |
|
$ |
8.52 |
|
$ |
7.42 |
|
$ |
8.83 |
|
Impairment of oil and natural gas properties |
|
$ |
— |
|
$ |
17.18 |
|
$ |
— |
|
$ |
10.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes the impact of derivative instrument settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes the impact of derivative instrument settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Includes a $3.7 million and $7.4 million
non-cash gain for the three and six months ended June 30, 2017,
respectively, and $3.7 million and $7.4 million non-cash gain for the three and six months ended June 30,
2016, respectively, from the amortization of the deferred gain on Western Catarina Midstream divestiture. |
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES
Cash outflows for capital expenditures during the second quarter 2017 totaled approximately $129.6 million. The Company
spent approximately 89 percent of its capital expenditures on drilling, completion, infrastructure, and geology and geophysics
activities, and 11 percent of its capital expenditures on leasing and business development activities.
FINANCIAL RESULTS
On a GAAP basis, the Company reported net income attributable to common stockholders of $24.2 million for the
second quarter 2017, which includes non-cash mark-to-market gains related to hedging activities of $52.4 million and $2.8 million
in one-time costs related to the Comanche transaction and other non-recurring items. This compares to the Company’s reported net
loss attributable to common stockholders of $186.9 million for the second quarter 2016.
The Company’s second quarter 2017 Adjusted EBITDA (a non-GAAP financial measure) of approximately $85.1 million
was up approximately 68 percent when compared to first quarter 2017 Adjusted EBITDA of $50.6 million. Second quarter 2017
Adjusted EBITDA includes a $3 million expense related to phantom units. The Company’s Adjusted Loss (a non-GAAP financial measure)
for the second quarter of $22.6 million excludes $52.4 million in non-cash mark-to-market gains related to hedging activities and
$2.8 million in one-time costs related to the Comanche transaction and other non-recurring items. The Company’s second
quarter 2017 results compare to Adjusted EBITDA of approximately $76.5 million and an Adjusted Loss of approximately $2.5 million
reported in the second quarter 2016. Adjusted EBITDA and Adjusted Loss are non-GAAP financial measures defined in the tables
included with today’s news release.
GENERAL AND ADMINISTRATIVE EXPENSE
On a GAAP basis, the Company reported general and administrative (“G&A”) expenses of $29.7 million in the
second quarter 2017. Included in G&A expenses is $2.8 million in acquisition and divestiture costs, $4.3 million of
non-cash equity compensation, and $3 million associated with phantom units that vest periodically in accordance with the terms of
the Company’s equity-based incentive awards. Excluding these items, G&A expenses during the second quarter 2017 were
approximately $19.5 million, which the Company believes is more reflective of its baseline G&A expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
Six Months Ended
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Base general and administrative |
|
$ |
19,506 |
|
$ |
13,685 |
|
$ |
39,865 |
|
$ |
29,819 |
Stock-based compensation - restricted stock (non-cash)
|
|
|
4,335 |
|
|
6,784 |
|
|
16,426 |
|
|
9,595 |
Stock-based compensation - phantom units |
|
|
3,024 |
|
|
3,092 |
|
|
13,965 |
|
|
3,627 |
Acquisition and divestiture costs included in G&A |
|
|
2,848 |
|
|
422 |
|
|
26,922 |
|
|
422 |
Total general and administrative |
|
$ |
29,713 |
|
$ |
23,983 |
|
$ |
97,178 |
|
$ |
43,463 |
HEDGING UPDATE
As of Aug. 9, 2017, the Company’s hedge position consisted of 21,522 barrels of oil per day (“Bbls/d”) and
161,818 million British thermal units of natural gas per day (“MMBtu/d”) for the second half of 2017, 17,521 Bbls/d and 186,881
MMBtu/d in 2018, 8,627 Bbls/d and 48,340 MMBtu/d in 2019 and 4,187 Bbls/d and 25,945 MMBtu/d in the first quarter 2020.
Additional information on the Company’s hedge positions by entity can be found in the Sanchez Energy Investor Presentation posted
at www.sanchezenergycorp.com.
LIQUIDITY AND CREDIT FACILITY
As of June 30, 2017, the Company had liquidity of approximately $560 million, which consisted of approximately
$128 million in cash and cash equivalents, an undrawn Sanchez Energy revolving credit facility with a borrowing base of $350
million and an elected commitment amount of $300 million, and $131.5 million of available capacity under a subsidiary-level
revolving credit facility, non-recourse to Sanchez Energy, with a borrowing base of $330 million.
SHARE COUNT
As of June 30, 2017, the Company had approximately 82.5 million common shares outstanding. Assuming all
Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock were converted, total outstanding
common shares as of June 30, 2017 would have been approximately 95 million. For the three months ended June 30, 2017, the
weighted average number of unrestricted common shares used to calculate net loss attributable to common stockholders per basic and
diluted common share, which are determined in accordance with GAAP, was 76.4 million and 89 million, respectively.
CONFERENCE CALL
Sanchez Energy will host a conference call for investors on Wednesday, Aug. 9, 2017, at 1:00 p.m. Central Time
(2:00 p.m. Eastern Time). Interested investors can listen to the call via webcast, both live and rebroadcast, over the
Internet at:
http://edge.media-server.com/m/p/9oge7pxu
ABOUT SANCHEZ ENERGY CORPORATION
Sanchez Energy Corporation (NYSE:SN) is an independent exploration and production company focused on the
acquisition and development of U.S. onshore unconventional oil and natural gas resources, with a current focus on the Eagle Ford
Shale in South Texas where it has assembled approximately 356,000 net acres. For more information about Sanchez Energy
Corporation, please visit our website: www.sanchezenergycorp.com.
FORWARD LOOKING STATEMENTS
This press release contains, and our officers and representatives may from time to time make, forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that
address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are
forward-looking statements, including statements relating to the expected financial and operational results of the Company, the
expected synergies and benefits related to the Comanche transaction, and the Company’s G&A expenses for the remainder of the
year. These statements are based on certain assumptions made by the Company based on management's experience, perception of
historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be
appropriate and reasonable by management. When used in this press release, the words "will," "potential," "believe,"
"estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model,"
"strategy," "future," or their negatives, other similar expressions or the statements that include those words, are intended to
identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the
control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking
statements, including, but not limited to the failure of acquired assets, including the Comanche assets, and our joint ventures
(including our partnership with affiliates of the Blackstone Group, L.P.) to perform as anticipated, inability to successfully
integrate the various assets acquired by us into our operations, fully identify potential problems with respect to such properties
and accurately estimate reserves, production and costs with respect to such properties, failure to continue to produce oil and gas
at historical rates, costs of operations, delays, and any other difficulties related to producing oil or gas, the price of oil or
gas, marketing and sales of produced oil and gas, estimates made in evaluating reserves, competition, general economic conditions
and the ability to manage our growth, our expectations regarding our future liquidity or production, our expectations regarding the
results of our efforts to improve the efficiency of our operations to reduce our costs and other factors described in the Company’s
most recent Annual Report on Form 10-K and any updates to those risk factors set forth in the Company’s Quarterly Reports on Form
10-Q or Current Reports on Form 8-K. Further information on such assumptions, risks and uncertainties is available in Sanchez
Energy's filings with the U.S. Securities and Exchange Commission (the "SEC"). The Company’s filings with the SEC are
available on our website at www.sanchezenergycorp.com and on the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events
anticipated by the Company's forward-looking statements may not occur, and, if any of such events do occur, Sanchez Energy may not
have correctly anticipated the timing of their occurrence or the extent of their impact on its actual results. Accordingly, you
should not place any undue reliance on any of the Company's forward-looking statements. Any forward-looking statement speaks
only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable
law.
SANCHEZ ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS DATA (unaudited)
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months
Ended |
|
|
|
June
30, |
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil sales |
|
$ |
91,096 |
|
|
$ |
65,786 |
|
|
$ |
164,372 |
|
|
$ |
108,468 |
|
|
Natural gas liquid sales |
|
|
36,873 |
|
|
|
21,979 |
|
|
|
63,973 |
|
|
|
37,024 |
|
|
Natural gas sales |
|
|
47,735 |
|
|
|
23,203 |
|
|
|
81,201 |
|
|
|
45,292 |
|
|
Total revenues |
|
|
175,704 |
|
|
|
110,968 |
|
|
|
309,546 |
|
|
|
190,784 |
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas production expenses |
|
|
64,848 |
|
|
|
44,919 |
|
|
|
105,073 |
|
|
|
89,612 |
|
|
Production and ad valorem taxes |
|
|
8,799 |
|
|
|
6,188 |
|
|
|
15,323 |
|
|
|
10,131 |
|
|
Depreciation, depletion, amortization and accretion |
|
|
50,851 |
|
|
|
43,342 |
|
|
|
84,057 |
|
|
|
90,308 |
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
109,464 |
|
|
General and administrative (1) |
|
|
29,713 |
|
|
|
23,983 |
|
|
|
97,178 |
|
|
|
43,463 |
|
|
Total operating costs and expenses |
|
|
154,211 |
|
|
|
205,812 |
|
|
|
301,631 |
|
|
|
342,978 |
|
|
Operating income (loss) |
|
|
21,493 |
|
|
|
(94,844 |
) |
|
|
7,915 |
|
|
|
(152,194 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
150 |
|
|
|
158 |
|
|
|
507 |
|
|
|
483 |
|
|
Other income (expense) |
|
|
(6,618 |
) |
|
|
211 |
|
|
|
3,917 |
|
|
|
(202 |
) |
|
Gain on disposal of assets |
|
|
7,133 |
|
|
|
— |
|
|
|
12,276 |
|
|
|
— |
|
|
Interest expense |
|
|
(35,961 |
) |
|
|
(31,822 |
) |
|
|
(68,986 |
) |
|
|
(63,428 |
) |
|
Earnings from equity investments |
|
|
242 |
|
|
|
2,179 |
|
|
|
677 |
|
|
|
2,691 |
|
|
Net gains (losses) on commodity derivatives |
|
|
59,615 |
|
|
|
(58,750 |
) |
|
|
98,496 |
|
|
|
(35,993 |
) |
|
Total other income (expense) |
|
|
24,561 |
|
|
|
(88,024 |
) |
|
|
46,887 |
|
|
|
(96,449 |
) |
|
Income (loss) before income taxes |
|
|
46,054 |
|
|
|
(182,868 |
) |
|
|
54,802 |
|
|
|
(248,643 |
) |
|
Income tax benefit |
|
|
255 |
|
|
|
— |
|
|
|
1,208 |
|
|
|
— |
|
|
Net income (loss) |
|
|
46,309 |
|
|
|
(182,868 |
) |
|
|
56,010 |
|
|
|
(248,643 |
) |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
|
|
(3,987 |
) |
|
|
(3,987 |
) |
|
|
(7,974 |
) |
|
|
(7,974 |
) |
|
Preferred unit dividends and distributions |
|
|
(10,949 |
) |
|
|
— |
|
|
|
(27,415 |
) |
|
|
— |
|
|
Preferred unit amortization |
|
|
(5,282 |
) |
|
|
— |
|
|
|
(6,992 |
) |
|
|
— |
|
|
Net income allocable to participating securities |
|
|
(1,893 |
) |
|
|
— |
|
|
|
(1,021 |
) |
|
|
— |
|
|
Net income (loss) attributable to common
stockholders |
|
$ |
24,198 |
|
|
$ |
(186,855 |
) |
|
$ |
12,608 |
|
|
$ |
(256,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic |
|
$ |
0.32 |
|
|
$ |
(3.20 |
) |
|
$ |
0.17 |
|
|
$ |
(4.38 |
) |
|
Weighted average number of shares used to calculate net income
(loss) attributable to common
stockholders - basic |
|
|
76,395 |
|
|
|
58,413 |
|
|
|
73,045 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - diluted |
|
$ |
0.31 |
|
|
$ |
(3.20 |
) |
|
$ |
0.17 |
|
|
$ |
(4.38 |
) |
|
Weighted average number of shares used to calculate net income
(loss) attributable to common
stockholders - diluted |
|
|
89,015 |
|
|
|
58,413 |
|
|
|
73,145 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) Inclusive of non-cash stock-based compensation expense of $4,335
and $6,784, respectively, for the three months ended June 30, 2017 and 2016,
and $16,426 and $9,595, respectively, for the six months ended June 30, 2017 and 2016. |
SANCHEZ ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET (unaudited)
(in thousands, except per share amounts) |
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
128,247 |
|
|
$ |
501,917 |
|
|
Oil and natural gas receivables |
|
|
67,271 |
|
|
|
41,057 |
|
|
Joint interest billings receivables |
|
|
23,080 |
|
|
|
496 |
|
|
Accounts receivable - related entities |
|
|
5,691 |
|
|
|
6,401 |
|
|
Fair value of derivative instruments |
|
|
38,926 |
|
|
|
— |
|
|
Other current assets |
|
|
9,630 |
|
|
|
12,934 |
|
|
Total current assets |
|
|
272,845 |
|
|
|
562,805 |
|
|
Oil and natural gas properties, at cost, using the full cost
method: |
|
|
|
|
|
|
|
Proved oil and natural gas properties |
|
|
4,186,528 |
|
|
|
3,164,115 |
|
|
Unproved oil and natural gas properties |
|
|
477,863 |
|
|
|
231,424 |
|
|
Total oil and natural gas properties |
|
|
4,664,391 |
|
|
|
3,395,539 |
|
|
Less: Accumulated depreciation, depletion, amortization and
impairment |
|
|
(2,818,705 |
) |
|
|
(2,736,951 |
) |
|
Total oil and natural gas properties, net |
|
|
1,845,686 |
|
|
|
658,588 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
Fair value of derivative instruments |
|
|
24,067 |
|
|
|
— |
|
|
Investments (Investment in SNMP measured at fair value of $27.2
million and $26.8 million as of June 30, 2017 and December 31, 2016,
respectively) |
|
|
33,851 |
|
|
|
39,656 |
|
|
Other assets |
|
|
41,604 |
|
|
|
25,231 |
|
|
Total assets |
|
$ |
2,218,053 |
|
|
$ |
1,286,280 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,784 |
|
|
$ |
1,076 |
|
|
Other payables |
|
|
3,067 |
|
|
|
2,251 |
|
|
Accrued liabilities: |
|
|
|
|
|
|
|
Capital expenditures |
|
|
96,336 |
|
|
|
35,154 |
|
|
Other |
|
|
89,083 |
|
|
|
82,458 |
|
|
Deferred premium liability |
|
|
— |
|
|
|
2,079 |
|
|
Fair value of derivative instruments |
|
|
2,229 |
|
|
|
31,778 |
|
|
Other current liabilities |
|
|
79,362 |
|
|
|
22,201 |
|
|
Total current liabilities |
|
|
272,861 |
|
|
|
176,997 |
|
|
|
|
|
|
|
|
|
|
Long term debt, net of premium, discount and debt issuance
costs |
|
|
1,893,789 |
|
|
|
1,712,767 |
|
|
Asset retirement obligations |
|
|
31,848 |
|
|
|
25,087 |
|
|
Fair value of derivative instruments |
|
|
1,306 |
|
|
|
3,236 |
|
|
Other liabilities |
|
|
56,387 |
|
|
|
64,333 |
|
|
Total liabilities |
|
|
2,256,191 |
|
|
|
1,982,420 |
|
|
Commitments and contingencies (Note 16) |
|
|
|
|
|
|
|
Mezzanine equity: |
|
|
|
|
|
|
|
Preferred units ($1,000 liquidation preference, 500,000 units
authorized; 500,000 and zero units issued and outstanding as of
June 30, 2017 and December 31, 2016, respectively) |
|
|
409,185 |
|
|
|
— |
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Preferred stock ($0.01 par value, 15,000,000 shares authorized;
1,838,985 shares issued and outstanding as of June 30, 2017 and
December 31, 2016 of 4.875% Convertible Perpetual Preferred
Stock, Series A; 3,527,830 shares issued and outstanding as of
June 30, 2017 and December 31, 2016 of 6.500% Convertible
Perpetual Preferred Stock, Series B) |
|
|
53 |
|
|
|
53 |
|
|
Common stock ($0.01 par value, 150,000,000 shares authorized;
82,504,903 and 66,156,378 shares issued and outstanding as of
June 30, 2017 and December 31, 2016, respectively) |
|
|
829 |
|
|
|
670 |
|
|
Additional paid-in capital |
|
|
1,347,426 |
|
|
|
1,112,397 |
|
|
Accumulated deficit |
|
|
(1,795,631 |
) |
|
|
(1,809,260 |
) |
|
Total stockholders' deficit |
|
|
(447,323 |
) |
|
|
(696,140 |
) |
|
Total liabilities and stockholders' deficit |
|
$ |
2,218,053 |
|
|
$ |
1,286,280 |
|
|
|
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation – Adjusted EBITDA
Adjusted EBITDA is a non‑GAAP financial measure that is used as a supplemental financial measure by our
management and by external users of our financial statements, such as investors, commercial banks and others, to assess our
operating performance as compared to that of other companies in our industry, without regard to financing methods, capital
structure or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures.
Our Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows
provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with
U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may
not calculate Adjusted EBITDA in the same manner. The following table presents a reconciliation of our net loss to Adjusted
EBITDA (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Three Months
Ended
March 31, |
|
Six Months
Ended
June 30, |
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
46,309 |
|
|
$ |
(182,868 |
) |
|
$ |
9,701 |
|
|
$ |
56,010 |
|
|
$ |
(248,643 |
) |
|
|
Adjusted by: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
35,961 |
|
|
|
31,822 |
|
|
|
33,025 |
|
|
|
68,986 |
|
|
|
63,428 |
|
|
|
Net losses (gains) on commodity derivative contracts |
|
|
(59,615 |
) |
|
|
58,750 |
|
|
|
(38,881 |
) |
|
|
(98,496 |
) |
|
|
35,993 |
|
|
|
Net settlements received on commodity derivative contracts
(1) |
|
|
7,177 |
|
|
|
34,720 |
|
|
|
(2,904 |
) |
|
|
4,273 |
|
|
|
87,878 |
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
50,851 |
|
|
|
43,342 |
|
|
|
33,206 |
|
|
|
84,057 |
|
|
|
90,308 |
|
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
— |
|
|
|
109,464 |
|
|
|
Stock-based compensation expense (non-cash) |
|
|
4,335 |
|
|
|
6,784 |
|
|
|
12,091 |
|
|
|
16,426 |
|
|
|
9,595 |
|
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
2,848 |
|
|
|
422 |
|
|
|
24,074 |
|
|
|
26,922 |
|
|
|
422 |
|
|
|
Income tax benefit |
|
|
(255 |
) |
|
|
— |
|
|
|
(953 |
) |
|
|
(1,208 |
) |
|
|
— |
|
|
|
Gain on sale of oil and natural gas properties |
|
|
(7,133 |
) |
|
|
— |
|
|
|
(5,143 |
) |
|
|
(12,276 |
) |
|
|
— |
|
|
|
Gain (loss) on embedded derivatives |
|
|
437 |
|
|
|
— |
|
|
|
(685 |
) |
|
|
(248 |
) |
|
|
— |
|
|
|
(Gain) Loss on investments |
|
|
8,058 |
|
|
|
— |
|
|
|
(8,864 |
) |
|
|
(806 |
) |
|
|
|
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,705 |
) |
|
|
(3,703 |
) |
|
|
(3,702 |
) |
|
|
(7,407 |
) |
|
|
(7,406 |
) |
|
|
Interest income |
|
|
(150 |
) |
|
|
(158 |
) |
|
|
(357 |
) |
|
|
(507 |
) |
|
|
(483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
85,118 |
|
|
$ |
76,491 |
|
|
$ |
50,608 |
|
|
$ |
135,726 |
|
|
$ |
140,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by
premiums associated with derivatives that settled during the respective periods, which may include premiums accrued but not yet
paid as of the end of the quarter based on timing of cash settlement payments with counterparties. |
|
|
|
|
SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation – Adjusted Earnings (Loss)
We present Adjusted Earnings (Loss) attributable to common stockholders (“Adjusted Earnings (Loss)”) in addition
to our reported net income (loss) in accordance with U.S. GAAP. This information is provided because management believes
exclusion of the impact of the items included in our definition of Adjusted Earnings (Loss) below will help investors compare
results between periods, identify operating trends that could otherwise be masked by these items and highlight the impact that
commodity price volatility has on our results. Adjusted Earnings (Loss) is not intended to represent cash flows for the
period, nor is it presented as a substitute for net income (loss), operating income (loss), cash flows provided by (used in)
operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP.
The following table presents a reconciliation of our net income (loss) to Adjusted Earnings (Loss) (in thousands, except per share
data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months
Ended
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Net income (loss) |
|
$ |
46,309 |
|
|
$ |
(182,868 |
) |
|
$ |
56,010 |
|
|
$ |
(248,643 |
) |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
|
|
(3,987 |
) |
|
|
(3,987 |
) |
|
|
(7,974 |
) |
|
|
(7,974 |
) |
|
Preferred unit dividends and distributions |
|
|
(10,949 |
) |
|
|
— |
|
|
|
(27,415 |
) |
|
|
— |
|
|
Preferred unit amortization |
|
|
(5,282 |
) |
|
|
— |
|
|
|
(6,992 |
) |
|
|
— |
|
|
Net income (loss) attributable to common shares and
participating securities |
|
|
26,091 |
|
|
|
(186,855 |
) |
|
|
13,629 |
|
|
|
(256,617 |
) |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses (gains) on commodity derivatives contracts |
|
|
(59,615 |
) |
|
|
58,750 |
|
|
|
(98,496 |
) |
|
|
35,993 |
|
|
Net settlements received on commodity derivative contracts
(1) |
|
|
7,177 |
|
|
|
34,720 |
|
|
|
4,273 |
|
|
|
87,878 |
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
87,380 |
|
|
|
— |
|
|
|
109,464 |
|
|
Stock-based compensation expense (non-cash) |
|
|
4,335 |
|
|
|
6,784 |
|
|
|
16,426 |
|
|
|
9,595 |
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
2,848 |
|
|
|
422 |
|
|
|
26,922 |
|
|
|
422 |
|
|
Gain on sale of oil and natural gas properties |
|
|
(7,133 |
) |
|
|
— |
|
|
|
(12,276 |
) |
|
|
— |
|
|
(Gain) Loss on embedded derivatives |
|
|
437 |
|
|
|
— |
|
|
|
(248 |
) |
|
|
— |
|
|
(Gain) Loss on investments |
|
|
8,058 |
|
|
|
— |
|
|
|
(806 |
) |
|
|
— |
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,705 |
) |
|
|
(3,703 |
) |
|
|
(7,407 |
) |
|
|
(7,406 |
) |
|
Tax impact of adjustments to net loss (2) |
|
|
(1,049 |
) |
|
|
— |
|
|
|
(1,578 |
) |
|
|
— |
|
|
Adjusted Loss |
|
|
(22,556 |
) |
|
|
(2,502 |
) |
|
|
(59,561 |
) |
|
|
(20,671 |
) |
|
Adjusted Loss allocable to participating securities
(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjusted Loss attributable to common
stockholders |
|
$ |
(22,556 |
) |
|
$ |
(2,502 |
) |
|
$ |
(59,561 |
) |
|
$ |
(20,671 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to calculate income (loss)
attributable to
common stockholders - basic and diluted |
|
|
76,395 |
|
|
|
58,413 |
|
|
|
73,045 |
|
|
|
58,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums
associated with derivatives that settled during the
respective periods, which may include premiums accrued but not yet paid as of the end of the quarter
based on timing of cash settlement payments with counterparties. |
|
|
|
|
|
|
|
(2) The tax impact is computed by utilizing the
Company’s effective tax rate on the adjustments to
reconcile net income (loss) to Adjusted Loss. |
|
|
|
|
|
|
|
(3) The Company's restricted shares of common stock are
participating securities. |
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATION
Non-GAAP Reconciliation – Adjusted Revenue
We present Adjusted Revenue in addition to our reported Revenue in accordance with U.S. GAAP. The Company
defines Adjusted Revenue as follows: total revenues plus cash settled derivatives. The Company believes Adjusted Revenue provides
investors with helpful information with respect to the performance of the Company's operations and management uses Adjusted Revenue
to evaluate its ongoing operations and for internal planning and forecasting purposes. See the table below which reconciles
Adjusted Revenue and total revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six
Months Ended
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Total Revenues |
|
$ |
175,704 |
|
$ |
110,968 |
|
$ |
309,546 |
|
$ |
190,784 |
Net settlements received on commodity derivative contracts
(1) |
|
|
7,177 |
|
|
34,720 |
|
|
4,273 |
|
|
87,878 |
Adjusted Revenue |
|
$ |
182,881 |
|
$ |
145,688 |
|
$ |
313,819 |
|
$ |
278,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums
associated with derivatives that settled during the respective periods, which may include premiums accrued but not yet
paid as of the end of the quarter based on timing of cash settlement payments with counterparties. |
|
COMPANY CONTACT: Kevin Smith VP Investor Relations (281) 925-4828 Cham King Investor Relations & Capital Markets (713) 756-2797 General Inquiries: (713) 783-8000 www.sanchezenergycorp.com