Sanchez Energy Stock Up On Purchase Of Shell's Eagle Ford Assets For $639 Mln

(RTTNews) - Shares of Sanchez Energy Corp. (SN) increased around 9 percent in the extended trading on Wednesday after the company said it has agreed to acquire operated assets to be named Catarina in the Eagle Ford trend of South Texas from European oil giant Royal Dutch Shell Plc (RDS-A, RDSA.L, RDSB.L, RDS-B) for approximately $639 million in cash.

The agreement is effective January 1, and is expected to close at the end of the second quarter of this year. The transaction is subject to usual and customary closing adjustments. Sanchez Energy expects the acquisition to be immediately accretive to earnings and cash flow per share.

The assets, consisting of 60 MMBOE of proved reserves and 24,000 BOE/D of average first quarter 2014 production, are located on approximately 106,000 net acres in Dimmit, LaSalle, and Webb Counties, Texas.

Shell noted that the sale includes approximately 176 operated producing wells and associated field facilities and infrastructure. Net production in the first quarter was approximately 24,000 barrels of oil equivalent per day, with approximately 60 percent crude and natural gas liquids.

Sanchez Energy expects this additional acreage to bring the total company position in the Eagle Ford to approximately 226,000 acres with up to 3,000 potential drilling locations and average first quarter 2014 pro forma production of approximately 42,800 BOE/D.

According to Shell, the latest sale is part of its restructuring of North Americas resources plays (shale oil and gas) portfolio, to focus on acreage positions that can reach the scale required by Shell. Shell previously has divested its acreage position in the Mississippi Lime in Kansas, its Utica shale position in Ohio and a portion of its acreage in the Sandwash Niobrara basins in Colorado as part of this strategy.

Looking ahead, on a pro forma basis, reflecting the anticipated June 30, 2014 acquisition closing, Sanchez Energy expects production for the third quarter to be 37 thousand to 41 thousand barrels of oil equivalent per day or BOE/D, and for the fourth quarter of 45 to 49 thousand BOE/D.

For fiscal 2014, the company projects pro forma production between 29 and 31 thousand BOE/D and for fiscal 2015 between 53 and 58 thousand BOE/D.

Sanchez Energy shares closed Wednesday's regular trading at $28.86, up $1.17 or 4.23 percent. In the after hours trading, stock gained $2.44 or 8.5 percent, and traded at $31.30.

In Amsterdam, Shell shares gained 0.22 euros or 0.76 percent on Wednesday, and settled at 29.03 euros.