Exploration and production (E&P) company, Sanchez Energy Corp. (SN), announced the completion of the Wycross acquisition. The company had entered into an agreement to purchase the assets in the Eagle Ford Shale on Sep 9.
A cost of about $230.1 million was incurred during the acquisition which included the initial deposit of $11.0 million. The total cost accounts for the purchase price of $220.0 million and other closing adjustments of $10.1 million. However, the final price will reflect post-closing adjustments as well.
The acquisition was funded by proceeds from the sale of about 11.0 million shares of common stock and the company’s senior notes offering worth $200 million.
Sanchez Energy has a working interest of about 60% in the acquired Wycross assets with potential for development in the coming two years. The assets are spread across 3,600 net acres in McMullen County, Texas.
The asset comprises 11 million barrels of oil equivalent (MMBOE) of proved reserves and is expected to increase production by approximately 2,000 barrels of oil equivalent per day.
Headquartered in Houston, Texas, Sanchez focuses on acquisition, exploration and development of oil and natural gas resources, primarily in the Eagle Ford Shale in South Texas.
Sanchez stock trades in a 52-week range of $16.90 to $29.31. The stock has been trading near the higher end for the greater part of last month with intraday high touching the upper end on Oct 4, before settling at $28.80. It reflected an increase of 4% over the previous day’s close. The traded volume also reported a jump of 59.4% over the previous close.
Sanchez Energy currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
However, one can consider other firms in the E&P industry such as Stone Energy Corp. (SGY) and Matador Resources Company (MTDR) which sport a Zacks Rank #1 (Strong Buy) or Carrizo Oil & Gas Inc. (CRZO) which currently holds a Zacks Rank #2 (Buy).
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