CST: 06/12/2016 15:53:28   

Sanchez Energy Fourth Quarter and Full-Year 2015 Financial Results and Operations Update

285 Days ago

SN Finishes 2015 With Strong Liquidity, Significant Hedge Position, Record Production

HOUSTON, TX --(Marketwired - February 25, 2016) - Sanchez Energy Corporation (NYSE: SN) ("Sanchez Energy," the "Company," "we," "our," "us" or similar terms), today announced the Company's operating and financial results for the fourth quarter and full-year 2015, which included the following highlights:

HIGHLIGHTS FOR FOURTH QUARTER OF 2015

  • Record production of 5.3 million barrels of oil equivalent ("MMBoe")
  • Record quarterly average daily production of 58,115 barrels of oil equivalent per day ("Boe/d")
  • Better than expected production results were driven by Catarina production of 46,030 Boe/d, the highest quarterly production level recorded to date from the asset, as well as strong performance from new wells in the Cotulla area
  • Average quarterly well costs at Catarina of $3.5 million per well and wells are 40 percent more productive since first acquired
  • $435 million cash balance at year-end 2015 and $735 million in total liquidity
  • Closed the Western Catarina Midstream Divestiture for approximately $345 million in cash
  • Entered a joint venture with Targa Resources Partners LP ("Targa") to construct a cryogenic processing plant and high pressure gathering pipeline near Catarina, which is expected to provide a path to improved yields, lower processing fees, and significant marketing benefits

HIGHLIGHTS FOR FULL-YEAR 2015

  • Record annual production of 19.2 MMBoe for an average annual production rate of 52,560 Boe/d, an increase of 72% over 2014 production
  • Record oil production averaging 19,629 barrels per day ("Bbl/d")
  • Upstream capital expenditures including accruals of $545 million in 2015 compared to $867 million in 2014, a reduction of approximately 37% over 2014
  • $155 million mark-to-market value of hedging position at year-end 2015 corresponding to hedge contracts covering approximately 82% of expected 2016 revenues, and $189 million current mark-to-market value of hedge position as of February 24, 2016
  • Completed the 50-well annual drilling commitment at Catarina for the period July 1, 2015 through June 30, 2016, which provides the Company with significant operational and financial flexibility in 2016 and 2017, as up to 30 wells drilled in excess of the minimum commitment can be carried forward to the next annual period
  • 2015 year-end proved reserves are approximately 128 MMBoe, with a PV-10, a non-GAAP measure defined below, of $594 million

MANAGEMENT COMMENTS

"2015 was a strong year for Sanchez Energy despite the most challenging commodity environment we have faced as a Company," said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. "Our achievements in 2015 include ending the year with a strong cash position of $435 million. The Company's cash position was aided by several key divestitures with Sanchez Production Partners which generated approximately $430 million in cash proceeds without needing to issue additional equity or debt. Our balance sheet remains strong and we are well prepared to weather a prolonged down cycle."

"In addition, our operations delivered exceptional results on all fronts in terms of both increased well productivity and continued cost reductions. We improved well results in all areas through increased drilling and completion efficiencies -- notably, Catarina wells are now over 40 percent more productive than they were when we acquired them. Next, we reduced our capital cost structure considerably by more than 55 - 65 percent across our asset areas. These two accomplishments alone significantly improved our well economics throughout our portfolio and allowed us to reach our original production target range with a capital program we reduced by about 50 percent over the course of the year. Furthermore, despite our lower capital spending levels, we continued to appraise our large acreage position in the Catarina and Cotulla areas of the Eagle Ford which resulted in booking of new proven undeveloped reserves in these areas. Strong production also resulted in positive revisions to existing reserve forecasts of proven developed producing and proven undeveloped wells for Catarina and Cotulla. 2015 yearend reserves were 128 MMboe at the SEC oil price of $50.28 / Bbl, which is roughly flat year over year despite oil price falling by roughly $45/Bbl relative to yearend 2014.

"Furthermore, we closed on an innovative midstream transaction in which we invested in a new gas processing plant and gathering pipeline with our 50-50 joint venture partner, Targa. This investment is expected to further reduce our operating costs, enhance our revenues and improve our netbacks in Catarina. We also ended the year with a solid hedge position including covering approximately 100% of our oil volumes and 95% of our gas volumes, both hedged in 2016 at attractive prices. This competitive hedge position will allow us to execute our 2016 plan and build flexibility for 2017. We expect that these achievements will provide a strong foundation as we navigate through 2016 and prepare for 2017."

OPERATIONS UPDATE

During the fourth quarter of 2015, the Company spud 14 gross wells (13.5 net) wells, and completed 29 gross wells (29 net wells). At Catarina, fourth quarter of 2015 development was focused primarily in Western and South-Central Catarina with well costs in the fourth quarter of 2015 averaging approximately $3.5 million per well. On January 1st, 2016, the Company completed the 50 well annual drilling commitment at Catarina for the year ending on June 30, 2016. Also, the Company has the flexibility to accrue (or bank) up to 30 wells for the following annual drilling commitment.

As of December 31, 2015, the Company had 621 gross (505 net) producing wells with 15 gross (11.5 net) wells in various stages of completion, as detailed in the following table:

         
Project Area   Gross
Producing Wells
  Gross
Wells Waiting/ Undergoing Completion
Catarina   287   8
Marquis   103   --
Cotulla / Wycross   145   --
Palmetto   72   7
TMS / Other   14   --
Total   621   15
         

PRODUCTION VOLUMES, AVERAGE SALES PRICES, OPERATING COSTS PER BOE

The Company's estimated total production for the fourth quarter of 2015 was approximately 5,347 thousand barrels of oil equivalent ("MBoe") (58,115 Boe/d), which represents an approximately 32 percent increase over the fourth quarter of 2014. The Company's fourth quarter of 2015 production significantly exceeded the high end of the Company's production guidance for the quarter, which ranged from 48,000 to 52,000 Boe/d. The Company's production mix during the fourth quarter of 2015 consisted of approximately 33 percent oil, 35 percent natural gas, and 32 percent natural gas liquids (NGLs). 

Revenues for the three months ended December 31, 2015 totaled $109.5 million, a decrease of 4 percent compared to the three months ended September 30, 2015, due to declining commodity prices partially offset by increased production volumes. 

Production, average sales prices, and unit operating costs and expenses for the fourth quarter and year-end 2014 and 2015, respectively, are summarized below:

                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2015   2014   2015   2014
Production volumes -                
  Oil (MBbl)     1,793     1,822     7,165     6,080
  NGLs (MBbl)     1,657     1,113     5,754     2,590
  Natural gas (MMcf)     11,377     6,621     37,594     14,827
    Total oil equivalent (MBoe)     5,347     4,038     19,184     11,141
    Boe/D     58,115     43,893     52,560     30,523
                         
Average sales price, excluding the realized impact of derivative instruments -                        
  Oil ($ per Bo)   $ 35.37   $ 68.27   $ 42.98   $ 88.64
  NGLs ($ per Bbl)   $ 12.31   $ 20.74   $ 11.99   $ 25.86
  Natural gas ($ per Mcf)   $ 2.26   $ 3.78   $ 2.63   $ 4.06
    Oil equivalent ($ per BOE)   $ 20.49   $ 42.72   $ 24.80   $ 59.79
                         
Average sales price, including the realized impact of derivative instruments -                        
  Oil ($ per Bo)   $ 57.68   $ 75.70   $ 60.28   $ 89.26
  NGLs ($ per Bbl)   $ 12.31   $ 20.74   $ 11.99   $ 25.86
  Natural gas ($ per Mcf)   $ 2.74   $ 3.98   $ 3.12   $ 4.13
    Oil equivalent ($ per BOE)   $ 28.99   $ 46.40   $ 32.23   $ 60.22
                         
Operating costs and expenses ($/Boe):                        
  Oil and natural gas production expenses (1)   $ 8.67   $ 7.28   $ 8.16   $ 8.40
  Production and ad valorem taxes   $ 1.28   $ 2.14   $ 1.40   $ 3.39
  General and administrative, excluding stock based compensation and acquisition costs included in G&A (2)   $

2.99
  $

3.90
  $

3.09
  $

4.56
                           

(1) Includes amortization of gain on sale of Catarina Midstream of ($0.58) per Boe for the three months ended December 31, 2015 and ($0.16) per Boe for the year ended December 31, 2015. 
(2) Excludes stock-based compensation of ($0.20) and ($3.23) per BOE for the three months ended December 31, 2015 and 2014, respectively, and $0.77 and $1.15 per BOE for the year ended December 31, 2015 and 2014, respectively. Also excludes acquisition and divestiture costs included in G&A of $0.71 and $0 per BOE for the three months ended December 31, 2015 and 2014, respectively, and $0.20 and $0.16 per BOE for the year ended December 31, 2015 and 2014, respectively.

 
GUIDANCE
     
    Guidance
    1Q 2016   FY 2016
Production Volumes:        
  Oil (Bbls/d)   16,000 - 17,333   16,000 - 17,333
  NGLs (Bbls/d)   16,000 - 17,333   16,000 - 17,333
  Natural Gas (Mcf/d)   96,000 - 104,000   96,000 - 104,000
Barrel of Oil Equivalent (Boe/d)   48,000 - 52,000   48,000 - 52,000
         
Production Costs:        
  Cash Production Expense ($/Boe)(1)   $8.75 - $9.75   $8.75 - $9.75
  Non-Cash Production Expense ($/Boe)   $0.80- $0.90   $0.80- $0.90
  Production & Ad Valorem Taxes (% of O&G Revenue)   5% - 6%   5% - 6%
  Cash G&A ($/Boe)(2)   $2.75 - $3.25   $2.75 - $3.25
  Interest Expense ($MM)   $30.0   $120.0
  Preferred Dividend ($MM)   $4.0   $16.0
           
     
(1)   Cash Production Expense guidance relates only to production expense as reported on the cash flow statement and does not include the effect from deferred gain related to the sale of the Western Catarina Midstream sale.
(2)   Excludes stock based compensation.
     

UPSTREAM CAPITAL EXPENDITURES

Upstream capital expenditures, including accruals, for the fourth quarter 2015 were approximately $64 million. For 2015 the annual total upstream capital expenditures totaled $545 million, a reduction of 37 percent over 2014 levels. This represents approximately a 5 percent decrease from the midpoint of the annual guidance range of $550 million to $600 million and was achieved in part from well cost improvements throughout the year.

In 2016 the Company plans to drill 52 net wells and complete 55 net wells with a capital expenditure budget ranging from $200 million to $250 million and is summarized in the table below:

       
    2016 Capital Expenditure Budget  
    Net Wells
Spud
  Net Wells
Completed
  Upstream Capital 
(in millions)
  % of Operating
Capital
    % of Drilling & Completion Capital  
Catarina   35   36   $ 130 - $150   62 %   70 %
Marquis   -   -   $ 0   0 %   0 %
Cotulla   15   15   $ 40 - $50   20 %   23 %
Palmetto   2   4   $ 10 - $20   7 %   8 %
Total Eagle Ford   52   55   $ 180 - $220   89 %   100 %
TMS   -   -   $ 0   0 %   0 %
Total D&C Capital Budget   52   55   $ 180 - $220   89 %   100 %
Factilities, Leasing and Seismic           $ 20 - $30   11 %      
Total Capital Budget           $ 200 - $250   100 %      
                           

SHARE COUNT

As of December 31, 2015, the Company had 61.9 million total common shares outstanding with a quarterly weighted average outstanding share count of 57.5 million. If all Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock were assumed to be converted, total outstanding shares as of December 31, 2015 would have been 74.4 million.

CONFERENCE CALL

Sanchez Energy will provide results of its fourth quarter and full year 2015 in its earnings conference call for investors on February 25, 2016 at 1:00 p.m. Central Time (2:00 p.m. Eastern Time). The table below provides details for interested parties to dial in to the conference call, or listen to the webcast.

     
Event:   Sanchez Energy Corporation Fourth Quarter and Full Year 2015 Earnings Conference Call
     
Date/Time:   Thursday, February 25, 2016, 1:00 p.m. Central Time (2:00 p.m. Eastern Time)
     
Dial In:   1-888-349-0085 (U.S.)
    1-855-669-9657 (Canada)
    001-855-817-7630 (Mexico)
    1-412-902-4293 (International)
    Request Sanchez Energy Corporation call
     
Webcast:   Live and rebroadcast over the Internet at
    http://edge.media-server.com/m/p/du28khnv
     
Replay:   A replay will be available one hour after the call through March 6, 2016, at 11:59 p.m. Eastern Time. You may access this replay by dialing (877) 870-5176 (U.S.) or (858) 384-5517 (International), and referencing the replay passcode: 10080744.
     

ABOUT SANCHEZ ENERGY CORPORATION

Sanchez Energy Corporation is an independent exploration and production company focused on the acquisition and development of unconventional oil resources in the onshore U.S. Gulf Coast, with a current focus on the Eagle Ford Shale in South Texas where we have assembled approximately 200,000 net acres, and the Tuscaloosa Marine Shale. For more information about Sanchez Energy Corporation, please visit our website: www.sanchezenergycorp.com.

FORWARD LOOKING STATEMENTS

This press release contains, and our officers and representatives may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Sanchez Energy expects, believes or anticipates will or may occur in the future are forward-looking statements, including statements relating to estimates of our future production, revenues, operational and commercial benefits of the joint venture with Targa, our strategy and plans, our view of the market, and our well drilling plans. These statements are based on certain assumptions made by the Company based on management's experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model," "strategy," "future," or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Sanchez Energy, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including, but not limited to failure of acquired assets to produce as anticipated, failure or delays on the part of our joint venture partners, failure to continue to produce oil and gas at historical rates, costs of operations, delays, and any other difficulties related to producing oil or gas, the price of oil or gas, marketing and sales of produced oil and gas, estimates made in evaluating reserves, competition, general economic conditions and the ability to manage our growth, our expectations regarding our future liquidity, our expectations regarding the results of our efforts to improve the efficiency of our operations to reduce our costs and other factors described in Sanchez Energy's most recent Annual Report on Form 10-K and any updates to those risk factors set forth in Sanchez Energy's Quarterly Reports on Form 10-Q. Further information on such assumptions, risks and uncertainties is available in Sanchez Energy's filings with the Securities and Exchange Commission (the "SEC"). Sanchez Energy's filings with the SEC are available on our website at www.sanchezenergycorp.com and on the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events anticipated by Sanchez Energy's forward-looking statements may not occur, and, if any of such events do occur, Sanchez Energy may not have correctly anticipated the timing of their occurrence or the extent of their impact on its actual results. Accordingly, you should not place any undue reliance on any of Sanchez Energy's forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made and Sanchez Energy undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

CAUTIONARY NOTE TO U.S. INVESTORS

The SEC permits oil and gas companies, in their filings with the SEC, to disclose proved, probable and possible reserves. We may use certain terms in our press releases, such as net resource potential and other variations of the foregoing terms that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the reserves disclosures in our filings with the SEC available on our website at www.sanchezenergycorp.com and the SEC's website at www.sec.gov. You can also obtain this information from the SEC by calling its general information line at 1-800-SEC-0330.

(Financial Highlights to follow)

 
SANCHEZ ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(unaudited)
   
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
    (in thousands, except per share amounts)  
   
REVENUES:                                
  Oil sales   $ 63,417     $ 124,403     $ 307,971     $ 538,887  
  Natural gas liquids sales     20,409       23,071       69,011       66,989  
  Natural gas sales     25,706       25,017       98,797       60,188  
    Total revenues     109,532       172,491       475,779       666,064  
                                 
OPERATING COSTS AND EXPENSES:                                
  Oil and natural gas production expenses     46,362       29,378       156,528       93,581  
  Production and ad valorem taxes     6,859       8,626       26,870       37,787  
  Depreciation, depletion, amortization and accretion     48,031       112,800       344,572       338,097  
  Impairment of oil and natural gas properties     -       213,821       1,365,000       213,821  
  General and administrative (inclusive of stock-based compensation expense of ($1,093) and ($13,045), respectively, for the three months ended December 31, 2015 and 2014, and $14,831 and $12,843, respectively, for the year ended December 31, 2015 and 2014)  
 
 
14,870
     
2,693
     
74,160
     
63,692
 
    Total operating costs and expenses     116,122       367,318       1,967,130       746,978  
                                 
                                 
Operating loss     (6,590 )     (194,827 )     (1,491,351 )     (80,914 )
                                 
Other income (expense):                                
  Interest income and other income (expense)     (361 )     192       (2,165 )     289  
  Interest expense     (31,899 )     (31,655 )     (126,399 )     (89,800 )
  Net gains on commodity derivatives     61,336       130,806       172,886       137,205  
    Total other expense, net     29,076       99,343       44,322       47,694  
                                 
Income (loss) before income taxes     22,486       (95,484 )     (1,447,029 )     (33,220 )
                                 
Income tax expense (benefit)     -       (33,375 )     7,600       (11,429 )
                                 
Net income (loss)     22,486       (62,109 )     (1,454,629 )     (21,791 )
                                 
Less:                                
  Preferred stock dividends     (4,035 )     (3,991 )     (16,008 )     (33,590 )
  Net income allocable to participating securities (1)(3)     (1,317 )     -       -       -  
                                 
Net income (loss) attributable to common stockholders   $ 17,134     $ (66,100 )   $ (1,470,637 )   $ (55,381 )
Net income (loss) per common share - basic and diluted   $ 0.30     $ (1.18 )   $ (25.70 )   $ (1.06 )
                                 
Weighted average number of unrestricted common shares used to calculate net income (loss) per common share - basic and diluted (4)(5)     57,490       55,855       57,229       52,338  
                                 
Adjusted EBITDA, as defined (2)   $ 86,010     $ 133,716     $ 375,893     $ 490,633  
                                 
Adjusted net income (loss) attributable to common stockholders, as defined (2)   $ 2,043     $ (10,337 )   $ (105,812 )   $ 23,827  
Adjusted net income (loss) per common share - basic and diluted (6)(7)   $ 0.04     $ (0.19 )   $ (1.85 )   $ 0.46  
                                 
Weighted average number of unrestricted common shares used to calculate                                
adjusted net income (loss) per common share - basic and diluted (6)(7)     57,490       55,855       57,229       52,338  
                                 
                                 
(1)   The Company's restricted shares of common stock are participating securities.
(2)   Adjusted EBITDA, Adjusted Net Income attributable to common stockholders and Adjusted Net Income per common share are defined below.
(3)   For the year ended December 31, 2015 and the three months and year ended December 31, 2014, no losses were allocated to participating restricted stock because such securities do not have a contractual obligation to share in the Company's losses.
(4)   The three months and year months ended December 31, 2015 excludes 1,735,299 and 2,663,010 shares of weighted average restricted stock and 12,525,210 and 12,529,314 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted earnings per common share as these shares were anti-dilutive.
(5)   The three months and year months ended December 31, 2014 excludes 622,301 and 1,732,888 shares of weighted average restricted stock and 12,530,695 and 13,527,378 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted earnings per common share as these shares were anti-dilutive.
(6)   The three months and year ended December 31, 2015 excludes 1,735,299 and 2,663,010 shares of weighted average restricted stock and 12,525,210 and 12,529,314 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted Adjusted Net Income per common share as these shares were anti-dilutive.
(7)   The three months and year ended December 31, 2014 excludes 622,301 and 1,732,888 shares of weighted average restricted stock and 12,530,695 and 13,527,738 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted Adjusted Net Income per common share as these shares were anti-dilutive.
     
     
   
SANCHEZ ENERGY CORPORATION  
CONSOLIDATED BALANCE SHEET  
(unaudited)  
             
             
    December 31,     December 31,  
    2015     2014  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 435,048     $ 473,714  
  Oil and natural gas receivables     30,668       69,795  
  Joint interest billings receivables     1,259       14,676  
  Accounts receivable - related entities     3,697       386  
  Fair value of derivative instruments     172,494       100,181  
  Other current assets     23,452       23,002  
    Total current assets     666,618       681,754  
Oil and natural gas properties, at cost, using the full cost method:                
  Unproved oil and natural gas properties     253,529       385,827  
  Proved oil and natural gas properties     2,914,867       2,582,441  
    Total oil and natural gas properties     3,168,396       2,968,268  
Less: Accumulated depreciation, depletion, amortization and impairment     (2,412,293 )     (706,590 )
Total oil and natural gas properties, net     756,103       2,261,678  
                 
Other assets:                
  Debt issuance costs, net     41,039       48,168  
  Fair value of derivative instruments     5,789       24,024  
  Deferred tax asset     -       7,443  
  Investments     49,985       -  
  Other assets     22,810       19,101  
Total assets   $ 1,542,344     $ 3,042,168  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 4,184     $ 29,487  
  Other payables     2,004       4,415  
  Accrued liabilities:                
    Capital expenditures     51,983       162,726  
    Other     69,975       67,162  
  Deferred premium liability     24,548       -  
  Other current liabilities     14,813       5,166  
    Total current liabilities     167,506       268,956  
Long term debt, net of premium and discount     1,746,966       1,746,263  
Asset retirement obligations     25,907       25,694  
Fair value of derivative instruments     -       889  
Other liabilities     58,133       779  
    Total liabilities     1,998,512       2,042,581  
Commitments and contingencies (Note 14)                
Stockholders' equity:                
    Preferred stock ($0.01 par value, 15,000,000 shares authorized; 1,838,985 shares issued and outstanding as of December 31, 2015 and 2014 of 4.875% Convertible Perpetual Preferred Stock, Series A; 3,527,830 and 3,532,330 shares issued and outstanding as of December 31, 2015 and 2014 of 6.500% Convertible Perpetual Preferred Stock, Series B, respectively)     53       53  
    Common stock ($0.01 par value, 150,000,000 shares authorized; 61,928,089 and 58,580,870 shares issued and outstanding as of December 31, 2015 and 2014, respectively)     619       586  
  Additional paid-in capital     1,079,513       1,064,667  
  Accumulated deficit     (1,536,353 )     (65,719 )
    Total stockholders' equity (deficit)     (456,168 )     999,587  
Total liabilities and stockholders' equity   $ 1,542,344     $ 3,042,168  
                 

SANCHEZ ENERGY CORPORATION

HEDGING SUMMARY

As of December 31, 2015, the Company had the following NYMEX WTI crude oil hedging transactions covering anticipated future production:

Crude Oil Swaps:

             
Calendar Year   Volumes
 (Bbls)
  Average Price
 per Bbl
  Price Range
per Bbl
2016   2,562,000   $ 70.11   $ 62.00   - $ 80.15
                         

Crude Oil Puts:

                         
Calendar Year   Volumes (Bbls)   Put Price per Bbl   Put Price Range per Bbl
2016   4,026,000   $ 60.00   $ 60.00   - $ 60.00
                         

As of December 31, 2015, the Company had the following NYMEX Henry Hub natural gas hedging transactions covering anticipated future production:

Natural Gas Swaps:

                         
Calendar Year   Volumes
(Mmbtu)
  Average Price
per Mmbtu
  Price Range
 per Mmbtu
2016   36,290,000   $ 3.12   $ 2.54   - $ 3.92
2017   27,945,000   $ 3.00   $   2.89     $ 3.65
                         
   
   
   
SANCHEZ ENERGY CORPORATION  
Non-GAAP Reconciliation: PV10 to Standardized Measure  
   
   
    Year Ended  
    December 31,  
    2015     2014  
             
Estimated future net revenues   $ 1,012,618     $ 3,560,539  
10% annual discount for estimated timing of future cash flows     (419,144 )     (1,637,201 )
  Estimated future net revenues discounted at 10% (PV-10)     593,474       1,923,338  
Estimated future income tax expenses discounted at 10%     -       (142,761 )
                 
  Standardized Measure   $ 593,474     $ 1,780,577  
                 
   
   
   
SANCHEZ ENERGY CORPORATION  
Non-GAAP Reconciliation - Adjusted EBITDA  
   
   
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
                                 
Net income (loss)   $ 22,486     $ (62,109 )   $ (1,454,629 )   $ (21,791 )
Plus:                                
  Interest expense     31,899       31,655       126,399       89,800  
  Net gains on commodity derivative contracts     (61,336 )     (130,806 )     (172,886 )     (137,205 )
  Net settlements received on commodity derivative contracts     45,487       15,252       142,468       5,600  
  Depreciation, depletion, amortization and accretion     48,031       112,800       344,572       338,097  
  Impairment of oil and natural gas properties     -       213,821       1,365,000       213,821  
  Stock-based compensation expense     (1,093 )     (13,045 )     14,831       12,843  
  Acquisition and divestiture costs included in general & administrative     3,814       2       3,814       1,808  
  Write off of joint venture receivable, non-recurring     -       -       2,251       -  
  Income tax expense (benefit)     -       (33,375 )     7,600       (11,429 )
Less:                                
  Amortization of deferred gain on Catarina Midstream Sale     (3,086 )             (3,086 )        
  Premiums on commodity derivative contracts (1)     -       (359 )     -       (718 )
  Interest income     (192 )     (120 )     (441 )     (193 )
                                   
  Adjusted EBITDA   $ 86,010     $ 133,716     $ 375,893     $ 490,633  
                                 
                                 
(1) This amount includes premiums accrued but not paid as of the end of the period.  
   
   
   
   
SANCHEZ ENERGY CORPORATION  
Non-GAAP Reconciliation - Adjusted Net Income  
                         
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
                         
Net income (loss)   $ 22,486     $ (62,109 )   $ (1,454,629 )   $ (21,791 )
Less: Preferred stock dividends     (4,035 )     (3,991 )     (16,008 )     (33,590 )
                                 
Net income (loss) attributable to common shares     18,451       (66,100 )     (1,470,637 )     (55,381 )
Plus:                                
  Non-cash preferred stock dividends associated with conversion     48       -       48       17,297  
  Non-cash write off of joint venture receivables     -       -       2,251       -  
  Net gains on commodity derivative contracts     (61,336 )     (130,806 )     (172,886 )     (137,205 )
  Net settlements received on commodity derivative contracts     45,487       15,252       142,468       5,600  
  Premiums on commodity derivative contracts (1)     -       (359 )     -       (718 )
  Impairment of oil and natural gas properties     -       213,821       1,365,000       213,821  
  Stock-based compensation expense     (1,093 )     (13,045 )     14,831       12,843  
  Acquisition and divestiture costs included in general and administrative     3,814       2       3,814       1,808  
  Amortization of deferred gain on Catarina Midstream Sale     (3,086 )     -       (3,086 )     -  
  Tax impact of adjustments to net income (loss) (2)     (85 )     (29,102 )     12,385       (33,081 )
Adjusted net income (loss)     2,200       (10,337 )     (105,812 )     24,984  
Adjusted net income allocable to participating securities (3)     (157 )     -       -       (1,157 )
  Adjusted net income (loss) attributable to common stockholders   $ 2,043     $ (10,337 )   $ (105,812 )   $ 23,827  
                                 
                                 
Adjusted net income (loss) per common share - basic and diluted (4) (5)   $ 0.04     $ (0.19 )   $ (1.85 )   $ 0.46  
Weighted average number of unrestricted outstanding common shares used to calculate adjusted net income (loss) per common share - basic and diluted (4) (5)     57,490       55,855       57,229       52,338  
                                 
                                 
(1) This amount includes premiums accrued but not paid as of the end of the period.  
(2) The tax impact is computed by utilizing the Company's effective tax rate on the adjustments to reconcile net income to Adjusted Net Income.  
(3) The Company's restricted shares of common stock are participating securities.  
(4) The three months and year ended December 31, 2015 excludes 1,735,299 and 2,663,010 shares of weighted average restricted stock and 12,525,210 and 12,529,314 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted Adjusted Net Income per common share as these shares were anti-dilutive.  
(5) The three months and year ended December 31, 2014 excludes 622,301 and 1,732,888 shares of weighted average restricted stock and 12,530,695 and 13,527,738 shares of common stock resulting from an assumed conversion of the Company's Series A Convertible Perpetual Preferred Stock and Series B Convertible Perpetual Preferred Stock from the calculation of the denominator for diluted Adjusted Net Income per common share as these shares were anti-dilutive.  
                                 

COMPANY CONTACT

G. Gleeson Van Riet
Chief Financial Officer
Sanchez Energy Corporation
713-783-8000

Jaime Brito
Senior Vice President, Investor Relations
Sanchez Energy Corporation
713-783-8000