How Have Sanchez Energy’s Assets Transformed?
Sanchez Energy’s portfolio
Sanchez Energy’s (SN) proved reserves have grown from 59 MMboe (million barrels of oil equivalent) in 2013 to 343 MMboe in 2016. When considering an upstream energy company’s valuation, investors take into account its proved reserves, as they are an important metric to determine a firm’s future cash flows.
According to SN’s 10-K filing, the discounted value of its reserve base at the end of 2016 was ~$513.4 million. This value compares to ~$593.5 million at the end of 2015.
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Sanchez Energy’s net acreage position has almost tripled since 2013, growing from 140,000 in 2013 to 397,000 in 2016. Its drilling locations increased from 1,700 in 2013 to 4,181 in 2016. SN’s management noted that it would continue to divest non-core assets and use the cash to acquire larger positions in the Eagle Ford.
SN’s management noted in the 2Q17 earnings conference, “We are looking at our asset base, high grading it by focusing on the higher rates of return, monetizing or would look to monetize non-core assets and then use that cash either to drive our organic growth or use that cash to finance the next acquisition or a combination of both.”
Next, we’ll read about SN’s cost structure versus its peers.