On Jan 7, upstream energy firm Sanchez Energy (SN) provided an update on its 2015 capital spending and guidance.
Capital Plan
The company projects capital spending of about $600–$650 million in 2015, down approximately 60% from the earlier guidance of $1.15 billion. The current weakness in crude prices led to the drastic cut in the proposed spending.
Of the total amount, about $560–$600 million will be utilized for drilling and completion activities. The remaining $40–$50 million would be spent on midstream, leasing and other purposes.
Sanchez Energy expects to finance the entire budget with available cash and from operating activities. Moreover, the company believes that it will not require funds from its credit facility.
Drilling & Production
Sanchez Energy said that it would lower its drilling activity, which is likely to result in a 60% drop in its rig count. The company now plans to use only 3 rigs, down from 7 rigs in the last quarter. The company plans to spud 75 net wells and complete 88 net wells using its drilling budget in 2015.
Despite a drop in drilling activity, the company expects a 40% growth in yearly production. Average 2015 production is likely to range between 40,000 and 44,000 barrels of oil equivalent per day (Boe/d). First quarter 2015 production is likely to average between 40,000 and 44,000 Boe/d, comprising about 46% oil.
Zacks Rank & Stock Picks
Houston, TX-based Sanchez Energy is an exploration and production company with current focus on Eagle Ford shale. The company currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks include Seadrill Partners LLC (SDLP), QEP Midstream Partners, LP (QEPM), Cheniere Energy Partners LP. (CQP), each sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment