Sanchez stays focused on the Eagle Ford

Sanchez Energy Corp. was once known as the pure Eagle Ford Shale player, with 140,000 net acres.

The company just bought a big position in Lousiana and Mississippi’s Tuscalosa Marine Shale. But its main focus continues to be in South Texas for now, according to the company’s recent call with analysts.

The Houston-based company said that 98 percent of its drilling an completion budget for 2013 is focused on the Eagle Ford.

Sanchez is in Gonzales, Zavala, Frio, Fayette, Lavaca, Atascosa, Webb and DeWitt counties, where it says it has proven reserves of 43 million barrels of oil equivalent.

The company expects to exit the year making 15,000 to 17,000 barrels of oil equivalent per day, President and CEO Tony Sanchez said.

In what the company calls its “Cotulla asset” (acreage in some of the western Eagle Ford counties) the company plans 14 net wells this year, which it is drilling with one rig. That’s four more than it had planned previously.

In that Cotulla acreage, by the end of August it should have completed a conversion from temporary production facilities to permanent facilities.

In its “Maverick” acreage (also in the western counties of the Eagle Ford), Sanchez is testing the Pearsall formation, a deeper shale than the Eagle Ford. It’s completing a horizontal well on a 6,000 acre ranch now.

Is the Buda Limestone next for Sanchez?

The company said it is monitoring other Buda wells in the region. “We have numerous leases within our Cotulla and Maverick areas which are prospective from the Buda and Pearsall and are evaluating drilling and testing these targets in 2014,” COO Joe DeDominic said.

In Sanchez’s “Palmetto” acreage (Gonzales and DeWitt counties), where it has a 50 percent working interest with Marathon Oil Corp., it has completed 90 wells in the second quarter with initial 30-day production rates around 1,050 barrels of oil equivalent per day.

Five of those wells are part of a pilot project for 40-acre spacing, and DeDominic said, “they continue to exceed our production expectations with no material interference impacts.”

Sanchez and Marathon are running two rigs in that area. “We are now forecasting participating in a total of 30 gross wells in 2013 with these two existing rigs,” DeDominic said.

In the “Marquis area” (Fayette, Colorado, Gonzales and Lavaca counties), Sanchez plans to drill 22 net wells with the three rigs.

Sanchez had to temporarily abandon a well in this area after several problems and is negotiating with the cement contractor, DeDominic said.