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How Is the Comanche Acquisition Working Out for Sanchez Energy?

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Part 7
How Is the Comanche Acquisition Working Out for Sanchez Energy? PART 7 OF 13

Sanchez Energy’s Hedge Position for 2017 and Beyond

Sanchez Energy’s hedges

On August 9, 2017, Sanchez Energy’s (SN) hedge position consisted of 21,522 barrels of oil per day and 161,818 million British thermal units of natural gas per day. As we can see in the image below, the company has oil and gas hedges in place up until 2020.

Sanchez Energy entered into swaps that covered ~80% of its forecast oil and natural gas volumes from the proved and developed reserves it had acquired from the Comanche transaction. SN reported $55.85 per barrel and $3.26 per MMBtu (million British thermal units) natural gas prices between April 2017 to September 2018. For the period from October 2018 to March 2020, the fixed prices were $53.52 per barrel and $2.82 per MMBtu.

Sanchez Energy’s Hedge Position for 2017 and Beyond

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For its remaining assets during 2Q17, SN added swaps that covered 4,000 barrels per day (or bpd) and 6,000 bpd of its 2H17 and 2018 oil production, respectively. The new oil swaps were placed at an average fixed price of ~$52 per barrel. 

Plus, the company added swaps covering ~11,300 MMBtus per day of its 2H17 natural gas production and added hedges covering a portion its 2018 natural gas production.

SN’s management noted during the 2Q17 earnings conference, “We have more to accomplish before we are satisfied with our 2018 oil hedge book, but given drawing global inventories in the flattened forward curve among other indicators, we anticipate opportunities to execute more hedges in the coming months. On the natural gas side, we are well hedged in 2018 and beyond.”

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