Sanchez Energy IPO Filing, An Eagle Ford Shale Winner (SEN, CHK, ECA, MRO)

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A new initial public offering being filed by a Houston-based company called Sanchez Energy Corporation may not garner much interest all on its own.  Not until investors realize that this is a company that appears to be focused almost entirely on the Eagle Ford Shale.  It is the Eagle Ford Shale region that has created many millionaires and some of the current oil and energy guys are loosely referring to the Eagle Ford as the next Spindletop.  No financial terms are being disclosed yet, but the filing is for up to $150 million in common stock.

The company is an independent exploration and production outfit focused on the exploration, acquisition and development of unconventional oil and natural gas resources.  The company was recently formed “for the purpose of acquiring SEP I’s unconventional oil and natural gas assets, which are held in SEP Holdings III and will be contributed to us as part of the formation transactions.”

What matters here besides being a new company is that this an Eagle Ford Shale player.  The company claims to have accumulated approximately 39,000 net leasehold acres in the oil and condensate, or black oil and volatile oil, windows of the Eagle Ford Shale in Gonzales, Zavala and Frio Counties of South Texas.  It also owns all rights and depths on the majority of its Eagle Ford Shale acreage, but it does have approximately 1,500 net acres in the Haynesville Shale in Natchitoches Parish, Louisiana.  Those are listed in the prospectus as being operated by Chesapeake Energy Corporation (NYSE: CHK) and Encana Corporation (NYSE: ECA). The company also has acquired roughly 82,000 net acres in northern Montana as prospective land for the Heath, Three Forks and Bakken Shales.

The majority of its cap-ex budget from July 2011 through December 2012 is said to be focused on the development and expansion of the oil focused Eagle Ford Shale acreage and operations.  The company further noted that it plans to aggressively pursue additional leasehold and strategic acquisitions in the Eagle Ford Shale.

Sanchez’s Eagle Ford Shale acreage is composed of approximately 9,300 net acres in Gonzales County, Texas that it calls its Palmetto area.  It also has about 29,500 net acres in Zavala and Frio Counties, Texas that it calls its Maverick area. Hilcorp Energy Company and its affiliates recently entered into a definitive agreement for the sale of 141,000 net acres in the Eagle Ford Shale, including its 50% ownership interest in the Palmetto area to Marathon Oil Corporation (NYSE: MRO) for approximately $3.5 billion at an average of $24,822 per acre before adjustments.  The company does note that when the acquisition closes on November 1, 2011 that Marathon will be its 50/50 working interest partner in the Palmetto area.

The sole book-runner is Johnson Rice & Company and the senior co-manager is Macquarie Capital.  Sanchez Energy plans to list its stock on the New York Stock Exchange under the symbol “SEN.”

The filing notes on the management team, “Our management team and the Sanchez Group have a proven track record in identifying, acquiring, and executing large drilling programs and have operated a wide range of drilling projects over the last 40 years, primarily focused as an operator in the South Texas and onshore Gulf Coast areas. Various members of the Sanchez Group have been in the oil and natural gas business since 1972, have drilled or participated in over 900 wells, directly and through joint ventures, and have invested substantial amounts of capital in the oil and natural gas industry.”

The full IPO filing is here.

JON C. OGG