Second quarter production of Houston-based Sanchez Energy Corp. far exceeded the company’s guidance, thanks to increased drilling and completion efficiencies combined with better than expected well performance.

“Estimated production for the second quarter 2015 averaged approximately 53,920 boe/d,” said CEO Tony Sanchez. “As a result of operational efficiencies, we are now able to drill and complete wells at a faster pace and at lower costs. This improvement in productivity has allowed us to put online additional wells in the first half of 2015 without spending additional capital beyond the budget or increasing the number of drilling rigs working on our assets.”

Guidance for the second quarter had been 42,000-46,000 boe/d. Second quarter production was 21% higher sequentially and 164% higher than the year-ago period. The production mix during the second quarter consisted of 39% oil, 31% natural gas and 30% natural gas liquids.

Production results at the Catarina operations in the Eagle Ford Shale surpassed expectations.

“At Catarina, through the significant drilling and cycle-time improvements, the company was able to bank 18 wells toward our next commitment period,” the CEO said. “By banking these wells, the company has increased flexibility on obligatory drilling for the next year. In addition, these incremental wells will have volume additions that will carry over into our 2016 production.

“Our appraisal wells brought online in the second quarter in south-central Catarina have rates and pressures in line with some of the strongest wells in western Catarina. In addition, a number of the wells we brought online previously in the east are showing shallower than expected declines.

“Although it is still early, we are increasingly optimistic about the performance of wells outside of the core western Catarina area and plan to provide additional details during our second quarter earnings call.”

Additionally, well costs have dropped to less than $4.5 million each in Catarina, thanks, in part, to an “innovative procurement strategy.” Going forward, the company’s Eagle Ford development plans remain primarily focused on Catarina, with four gross (3.5 net) rigs running over the course of this year.

During the three-month period, Sanchez brought online 35 gross wells (30 operated and five nonoperated) and 31 net wells (30 operated and one nonoperated). In south-central and south-eastern Catarina three pads were brought online with two wells each, with similar results to western results (see Shale Daily, April 22).

In the Tuscaloosa Marine Shale, Sanchez is completing the Bloomer 2H well and expects to bring it online in the third quarter.

At the end of June, the independent had 565 gross (449 net) producing wells with 32 gross (29.5 net) wells in various stages of completion.

The 2015 capital plan calls for spending $600-650 million, with $560-600 million allocated to spud 75 net wells and complete 88 net wells, and the remaining $40-50 million to fund midstream, leasing and other expenditures. This plan assumed $6.5 million Catarina per-well costs.

“As we are now realizing wells costs in Catarina of approximately $4.5 million…the company now has increased flexibility with respect to the number of drilled and completed wells during the course of 2015, while still remaining near the low end of the $600-650 million capital plan,” Sanchez said.

Production guidance for this year has been increased to 44,000-48,000 boe/d from the previously announced 42,000-46,000 boe/d. Guidance provided in January was 40,000-44,000 boe/d.