Sanchez Energy (SN) Q4 Production at High-End of Guidance

Sanchez Energy (NYSE: SN) provided an update on its fourth quarter and full year 2014 operations and year-end 2014 reserves.

Summary Highlights

• Sanchez Energy reported fourth quarter 2014 production of approximately 4,039 MBOE, an increase of 14% over the third quarter of 2014 and an increase of 133% compared to the same period a year ago. Daily average production was 43,897 BOE/D, at the high end of the fourth quarter 2014 guidance range of 40,000 – 44,000 BOE/D. Full year 2014 production was approximately 11,141 MBOE (30,523 BOE/D), an increase of 188% over 2013.
• Year-end 2014 proved reserves were 134.8 MMBOE, an increase of 129% compared to year-end 2013
• Current production of approximately 43,000 BOE/D with 46 gross wells in various stages of completion
• First quarter and full year 2015 production guidance of 40,000-44,000 BOE/D is reaffirmed

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: "We reached several milestones in 2014 including achieving the scale to continue our proven ability to deliver cost and operating efficiencies; material additions to our high quality, long-term inventory of drilling locations; and a solid balance sheet with excellent liquidity. We significantly grew our production and reserves as a result of executing our 2014 capital plan, our manufacturing process strategy, and successfully integrating our Catarina acquisition. We reacted early and decisively in response to the fall in oil prices, cutting our capital spending plans, and reducing our drilling and completion costs so that we are in a position to weather and thrive in this uncertain environment.

"As a result of continued increases in drilling efficiencies, completion optimizations, and realized unit cost reductions from the service sector, we are already achieving our targeted $5 million Catarina well costs. We expect continued cost saving through efficiencies in the coming months. These cost savings, coupled with higher well performance than initially expected, are leading to high rates of return in Catarina despite the lower commodity price environment."

Estimated Fourth Quarter and Full Year 2014 Production Volumes and Year-End 2014 Reserves

Estimated total production for the fourth quarter of 2014 was approximately 4,039 MBOE (43,897 BOE/D). Crude oil represented 45% of the total production stream, NGLs represented 28%, and natural gas represented 27%. Estimated total production for the full year 2014 was 11,141 MBOE (30,523 BOE/D). Crude oil represented 55% of the total production stream, NGLs represented 23%, and natural gas represented 22%.

Sanchez Energy announced that proved reserves increased to 134.8 MMBOE at December 31, 2014, up 129% from 58.7 MMBOE at December 31, 2013. Crude oil constituted 48% (74% crude oil and NGLs) of Sanchez Energy's proved reserves at December 31, 2014, and 52% of the Company's proved reserves were classified as proved undeveloped at December 31, 2014 as compared to 58% at December 31, 2013.

Note: The Company's estimated reserves were prepared by its independent reservoir engineering firm Ryder Scott & Company, L.P.

Operations Update

The Company has been focusing its resources on Catarina where recent efficiencies and unit cost reductions have led to substantial total well cost savings. Drilling durations have decreased from an average of 15 days per well (spud to TD) to an average of 9 days per well on the last 3 pads drilled. Completions efficiencies have also increased approximately 15% despite maintaining the same stage spacing from prior pads and increases in proppant levels pumped per lateral foot. Sanchez Energy's 2015 drilling plan calls for 4 gross (3.5 net) rigs focusing on Catarina and Palmetto in the Eagle Ford and 0.25 gross and net rigs in the TMS. As detailed in the table below, Sanchez Energy currently has 46 gross wells in various stages of completion.

First Quarter 2015 Operating and Financial Guidance

Sanchez Energy maintains its recently issued first quarter and full year 2015 production and financial guidance. Full year 2015 average production is expected to increase approximately 38% over 2014 average production at the mid-point of the guidance range.

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