Exploration and production (E&P) company, Sanchez Energy Corp. (SN) announced the pricing of a private placement of its senior notes worth $200 million to qualified institutional buyers. The offering was also increased from the previously announced value of $150 million and is expected to close on Sep 18, 2013.
The senior notes will carry an interest rate of 7.75% per annum and are scheduled to mature in 2021. Net proceeds from the offering are expected to be utilized to partly finance the Eagle Ford Shale acquisition and the 2013 and 2014 capital expenditure programs.
Earlier, on Sep 9, Sanchez had announced the acquisition of the Wycross assets. Spread across 3,600 net acres in McMullen County, Texas, the assets comprise 11.2 million barrels of oil equivalent (:MMBOE) of proved reserves and are expected to increase production by approximately 2,000 barrels of oil equivalent per day (BOE/D).
The company recently revised its capex plan for full year 2013, lowering the figures to $470 million from $475 million due to lower drilling and completion costs. For full year 2014, the company expects operating capital to be $700 million.
Headquartered in Houston, Texas, Sanchez Energy focuses on acquisition, exploration and development of oil and natural gas resources, primarily in the Eagle Ford Shale in South Texas.
Sanchez Energy currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
However, one can consider other firms in the E&P industry such as Range Resources Corporation (RRC), Carrizo Oil & Gas Inc. (CRZO) and Matador Resources Company (MTDR) as attractive investments. All the stocks sport a Zacks Rank #1 (Strong Buy).