Sanchez Energy announces record high oil, gas production for Q4

“During the fourth quarter of 2015, we continued to realize significant operational success, which resulted in higher production levels and declining well costs”

HOUSTON, TX – Sanchez Energy Corporation, today announced operating results for the fourth quarter of 2015 and updates to the 2016 capital budget.

“2015 was a strong year for Sanchez Energy,” said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. “Record-high production and improved well economics, including efficiency gains leading to as much as 6 per cent lower well costs, in addition to two pivotal midstream transactions have positioned us with the financial flexibility and tailwinds for our expected continued success in 2016’s commodity price environment and beyond.”

Highlights from operations include:

• Record production of 5.4 million barrels of oil equivalent reported by Sanchez Energy for an average production of 58,115 barrels of oil equivalent per day during the fourth quarter of 2015

• Better than expected production results during the fourth quarter of 2015 were driven by Catarina production of 46,030 BOE/D, the highest quarterly production level recorded to date from the asset, as well as strong performance from new wells in the Cotulla area

• Record quarterly average daily production of 58,115 BOE/D

• Average well costs at Catarina for the fourth quarter of 2015 were $3.5 million per well

• Completed the 50-well annual drilling commitment at Catarina for the period July 1, 2015 through June 30, 2016, which provides the Company with significant financial flexibility in 2016

• Closed the Western Catarina Midstream Divestiture during the fourth quarter of 2015 for approximately $345 million in cash

• Entered a joint venture with Targa Resources Partners LP during the fourth quarter of 2015 to construct a cryogenic processing plant and high pressure gathering pipelines near Catarina, which is expected to provide a path to improved yields, lower processing fees, and significant marketing benefits

• 2016 Capital Budget guidance lowered to $200 – $250 million that is expected to maintain nearly flat year-over-year average production, a reduction of $50 million from prior estimates resulting from improved well results and cost efficiencies

“During the fourth quarter of 2015, we continued to realize significant operational success, which resulted in higher production levels and declining well costs,” he continued. “Production for the fourth quarter of 2015 averaged approximately 58,115 BOE/D, significantly above the high end of our guidance range of 48,000 to 52,000 BOE/D for the quarter,” said Sanchez.

OPERATIONS UPDATE

During the fourth quarter of 2015, the Company spud 14 gross wells (13.5 net) wells, and completed 29 gross wells (29 net wells). At Catarina, fourth quarter of 2015 development was focused primarily in Western and South-Central Catarina.

Well costs at Catarina in the fourth quarter of 2015 averaged approximately $3.5 million per well. Well costs at Catarina continue to trend down, with recent pad averages below $3.5 million per well. Well cost reductions have come primarily as a result of efficiency improvements, which have been realized without modifications to well design.

“Results were driven by Catarina production of 46,030 BOE/D, the highest quarterly production level recorded to date from the asset, as well as strong performance from new wells in the Cotulla area. Our fourth quarter of 2015 record production represents an increase of approximately 32 per cent when compared to fourth quarter of 2014 production. For the full year, our 2015 average production was approximately 52,560 BOE/D, an increase of approximately 72 per cent over 2014 average daily production,” said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy.

As of Dec. 31, 2015, the Company had 621 gross (505 net) producing wells with 15 gross (11.5 net) wells in various stages of completion, as detailed in the following table:

PRODUCTION UPDATE

The Company’s estimated total production for the fourth quarter of 2015 was approximately 5,347 thousand barrels of oil equivalent (“MBOE”) (58,115 BOE/D), which represents an approximately 32 per cent increase over the fourth quarter of 2014.

The Company’s fourth quarter of 2015 production significantly exceeded the high end of the Company’s production guidance for the quarter, which ranged from 48,000 to 52,000 BOE/D. The Company’s production mix during the fourth quarter of 2015 consisted of approximately 34 per cent oil, 35 per cent natural gas, and 31 per cent natural gas liquids (“NGLs”).