American Oil and Gas Reporter - October 2015 - 68

SpecialReport: ED&P: Eagle Ford

Sanchez Energy's 2015 Eagle
Ford Shale plans have it spudding 86 wells and completing 108
wells. The company says it believes the play's proximity to the
Gulf Coast and Mexico provides
the Eagle Ford with logistical advantages for its production.

from spud to total depth in fewer than eight
days. That means each rig can drill three
wells a month."
According to Sanchez, the company
achieved a record daily production of
53,923 boe/d in the second quarter as it
maintained a commitment to continuously improving all aspects of its operations and cost competitiveness. "As we
continue to exercise financial discipline in
today's challenging commodity price environment, we plan to reduce capital
spending this year by an additional $50
million while still increasing our production targets by 2,000 boe/d-or approximately 4 percent," he states.
Sanchez says most of Sanchez Energy's
focus is concentrated on the Catarina asset it purchased from Shell in mid-2014.
The 106,000-acre Catarina Field, to which
the company is devoting three-fourths of
its capital expenditures, stretches across
parts of Texas' Dimmitt, La Salle and
Webb counties.
"During our first year of operating the
Catarina asset, we drilled 68 wells toward
our 50-well annual drilling commitment,
which allowed us to bank 18 wells toward
the 50-well drilling commitment that
runs from July 2015 through June 2016,"
he reports. "By the end of the fourth quarter, we anticipate we will have drilled nearly all 50 wells that the commitment requires. This gives us a tremendous amount
of operational and financial flexibility in
the first half of 2016 as we further evaluate commodity prices, capital markets and
acquisition opportunities."
Prime Position
Sanchez says the company tends to drill
its Catarina wells 7,000-8,000 feet verti-

68 THE AMERICAN OIL & GAS REPORTER

cally, and then laterally a minimum of
6,500 feet. "We have found the longer lateral correlates one-to-one with higher
EUR," he imparts. "Catarina is so large we
do not have to worry about lease lines."
Lateral placement is important, too,
Sanchez stresses. "We are targeting 10
feet," he continues. "If we can stay in a 1015 foot window rather than oscillating up
and down in the formation, production is
that much better."
Sanchez says the company has optimized its fluid management with a proprietary fluid. In some areas, the Eagle Ford
contains as many as three zones. In those
cases, Sanchez Oil & Gas relies on multiple stacked or staggered laterals. He adds
that it is drilling as many as 10-20 wells
a pad, citing the efficiencies of large-scale
operations, which include the ability to
amortize more wells and manage water
better. He reports that the company has settled on a minimum of 22-25 fracture
stages for each lateral and has tightened
cluster spacing with 300,000-500,000
pounds of proppant a stage.
But even as the company's Eagle Ford
manufacturing approach has become progressively more proficient, Sanchez admits
the learning curve has been steep. Sanchez
Energy entered the Eagle Ford in 2009 and
began drilling in 2010, he recalls. "We
ramped up after going public in 2011," he
says. "So 2012 was our first full year. We
are now in our fourth year. We are still early in the learning cycle, and I believe there
are more gains to be found in production
and EURs."
Sanchez reports the company is focusing on the Eagle Ford's rich gas and oil
windows. Catarina is producing 24 percent
crude oil, 37 percent natural gas liquids and

39 percent natural gas. Sanchez Oil & Gas'
second-quarter Eagle Ford production
was composed of 39 percent oil, 31 percent natural gas and 30 percent NGLs.
"That is a real benefit," Sanchez describes. "Our gas has a healthy liquids
component, which is a nice boost."
He adds that the company's 2015
plans have it spudding 86 wells and completing 108 wells, but then slowing that
pace to approximately 60 wells in 2016.
As he ponders the Eagle Ford's other
advantages, Sanchez mentions its proximity to Mexico and the Gulf Coast, which
he says should offer a nice spot from which
to export natural gas to Mexico and possibly export crude oil if the United States
eases its restrictions on domestic production. "The Eagle Ford is in a prime position," he maintains. "That is why we are
so bullish. Mexico will be a large importer
of gas, and a lot of that will come from
Texas. Because of that, gas prices should
have a floor."

Eagle Ford Expansion
Frank D. Bracken III, chief executive
officer and managing director of Fort
Worth-based Lonestar Resources Ltd., describes his company as "relatively small."
It is producing 10,000 boe/d, but Bracken says all its capital is earmarked for the
Eagle Ford. "We have grown rapidly," he
relates. "We have grown 100 percent annually since the inception of the company on Jan. 1, 2012. We were able to put
together quality acreage in a competitive
environment."
Bracken says Lonestar has drilled its
way into the Eagle Ford, often acquiring
packages or employing farm-in deals to expand that acreage. "We have been very active," he characterizes. "We have a flexible drilling schedule, because most of our
acreage is held by production. We have
used drilling capital to add acreage. In our
experience, farm-ins offer a primary
weapon to grow the business. Farm-ins
have been a principal source of leasehold
and reserve growth, and we see that trend
continuing. We have to be creative."
Lonestar Resources has approximately 35,000 acres in the Eagle Ford-stretching from one side of the play to the other, including Texas' Dimmitt, La Salle,
Wilson and Brazos counties-and the company serves as operator over every bit of
it. "I cannot dictate where opportunities are
created," he ponders. "We wanted to participate in growth, regardless of location
in the play. To do that, we have to establish ourselves as a quality operator. We

American Oil and Gas Reporter - October 2015

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