On Jun 13, 2014, independent exploration and production (E&P) company, Sanchez Energy Corp. (SN) reported the pricing of 6.125% senior notes. The principal amount of the notes which was previously reported at $700.0 million was upsized to $850.0 million. Sanchez Energy offered the notes primarily to finance the pending acquisition of the Eagle Ford properties, named Catarina, from integrated oil major Royal Dutch Shell plc (RDS.A). The offering of the notes − about to mature by 2023 – is anticipated to close by Jun 27, 2014.
Sanchez Energy added that the notes will likely be priced at par. The offering’s net proceeds are expected to finance $639.0 million Catarina acquisition, pay back debt under its credit facility and for other corporate activities. Sanchez Energy added that if the completion of the Eagle Ford properties acquisition occurs after Aug 31, 2014, it will spend the entire proceeds to redeem the senior notes.
Last month, Sanchez Energy entered into a deal with Shell to acquire properties in the Eagle Ford trend of South Texas. In the process, the company doubled its proved reserves. Also, the fact that these properties are immediately accretive to cash flow is an advantage.
Headquartered in Houston, TX, Sanchez Energy focuses on acquisition, exploration and development of oil and natural gas resources, primarily in the Eagle Ford Shale in South Texas.
The company has, however, performed poorly in the past few quarters. It has failed to meet the Zacks Consensus Estimate in the trailing four quarters, with an average negative surprise of 64.01%. Sanchez Energy currently holds a Zacks Rank #5 (Strong Sell), which reflects its weak performance in the last concluded quarter.
Meanwhile, one can consider better-ranked players from the oil and gas E&P industry like Encana Corp. (ECA) and Ultra Petroleum Corp. (UPL). Both stocks sport a Zacks Rank #1 (Strong Buy).
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