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First Sanchez-Operated TMS Well Hits a Snag

Sanchez Energy Corp.'s first operated Tuscaloosa Marine Shale (TMS) well ran into trouble during clean out, and the well's lateral is currently being sidetracked, Sanchez said Wednesday.

The Dry Fork East #2H well in Wilkinson County, MS, was spud in late May and reached total depth earlier this month within the planned time frame. However, before production casing was run, the drill string parted due to drill pipe defects, Sanchez said in a second quarter operations update.

"The lateral exhibited strong hydrocarbon shows during drilling, confirming our expectation of a good well," said CEO Tony Sanchez. "The TMS rig will run continuously throughout the year, allowing us to spud up to four gross operated wells in addition to participating in 10-15 gross nonoperated wells."

Analysts at Tudor, Pickering, Holt & Co. said in a note Thursday that they're looking forward to learning more about the TMS well but said Sanchez's troubles seem "similar to operational issues experienced by [Goodrich Petroleum Corp.] in late 2013/early 2014 [see Shale Daily, Dec. 27, 2013]." More recently, Goodrich's last two TMS wells have come in with disappointing initial production rates (see Shale Daily, July 7; June 19).

During the second quarter, Sanchez increased its net acreage position in the TMS to 58,000 acres from about 40,000, mainly through "bolt-on" acreage positions. "We expect other TMS operators to continue ramping up their activity and further derisk various portions of the play," Sanchez said. The company entered the play almost one year ago (see Shale Daily, Aug. 9, 2013).

He said the company is continuing full-scale development across all of its Eagle Ford Shale areas and has derisked the 10,000-net acre Five Mile Creek area of Marquis by bringing online six wells with initial 30-day average production rates of 450-700 boe/d. "We are currently drilling a Buda appraisal well in the Five Mile Creek area and are preparing to spud two Upper Eagle Ford wells in the Sante area.

"Estimated total production for the second quarter of 2014 was approximately 1.86 million boe (20,427 boe/d), within our guidance range of 19,000 to 21,000 boe/d...Across all assets, we have 43 gross wells drilled and waiting on completion and seven rigs running, resulting in a steady backlog of wells that will contribute to our continued production growth and reserve additions. We reiterate our third quarter 2014 production guidance range of 37,000 to 41,000 boe/d."

The company's second quarter earnings conference call is scheduled for Aug. 7.

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