Sanchez Energy Corporation, a fast growing independent oil and gas company with a 95,000 net acre position in the liquids-rich Eagle Ford Shale in Texas, recently announced that it has closed the private placement of $150 million of its 4.875% Cumulative Perpetual Convertible Preferred Stock, Series A (which includes $25 million from the exercise of the initial purchasers' overallotment option). Net proceeds from the offering were approximately $144.6 million, including the exercised overallotment option. Net proceeds are being used to fund the Company's capital expenditures, with a focus on accelerating its drilling program across all of its operating areas in the Eagle Ford, and for general corporate purposes.
Anticipated Credit Facilities
Additionally, Sanchez Energy anticipates closing shortly both a $250 million first lien revolving credit facility, with an initial borrowing base of $27.5 million, and a $250 million second lien term loan, with an initial commitment of $50 million, to provide further liquidity. The revolving credit facility is expected to have a term of three years, and the second lien term loan is expected to provide for a term of 42 months. There is no usage planned in 2012 under either tranche of the credit facilities.
Management Comments
Tony Sanchez, III, President and Chief Executive Officer, said, "Our recently closed $150 million convertible preferred offering, combined with our future cash flow from operations and modest debt from our anticipated credit facilities, provides the liquidity to continue executing and accelerating our drilling plans in 2012 and 2013."
Sanchez continued: "With each of our three major project areas in the Eagle Ford trend materially de-risked, we have approximately 800 to 1,200 net identified potential drilling locations. Our production has grown more than 90% from 1,200 BOE/d at the end of June to over 2,300 BOE/d at the end of August, and as we begin more developmental-type drilling programs in our three areas, we reaffirm our expected 2012 production exit rate to be between 4,000 and 5,000 BOE/d."
Operational Highlights
Palmetto Area
The Company's initial 2012 budget included drilling a total of 13 gross (6.5 net) wells with 9 gross (4.5 net) wells expected to be spud in the second half of 2012. The Company now anticipates to spud up to 12 gross (6.0 net) wells in the second half of 2012 for a total of up to 16 gross (8.0 net) wells spud in calendar 2012.
-- The Barnhart #14 (W.I. 50%) has been drilled and cased with a 7,176 foot lateral, and the Barnhart #15 (W.I. 50%), has been drilled and cased
from the same pad location with a 7,424 foot lateral. These two wells
are awaiting completion and are located adjacent to the Barnhart #5 and
#6, our two best performing Palmetto wells to date. The same rig has
started to drill the Barnhart A #1 well and is scheduled to spud up to
an additional four wells by the end of 2012, with one well located in
the northern portion of the Palmetto area and the remainder in the
southern portion. A second rig has been added to the Palmetto area and
has started drilling the Barnhart #18 well and is scheduled to spud up
to an additional four wells on the Company's southern acreage by the end
of 2012. In Palmetto, the Company has approximately 115 net identified
potential drilling locations targeting approximately 35 million barrels
