HOUSTON, April 20 (UPI) -- U.S. inland oil player Sanchez Energy Corp. said Wednesday its average daily oil production volume was down nearly 10 percent from last year.
Total production of oil, natural gas and other liquids during the first quarter of the year was 56,500 barrels of oil equivalent per day, which Sanchez said represented a 25 percent increase from first quarter 2015. Output is divided evenly between the three categories, and all of the gains came from gas and other liquids.
For oil, the company said it produced a total of 1.6 million barrels during the first quarter of the year, an 8 percent decline from the previous quarter and a 9 percent decline year-on-year.
A short-term market report from the U.S. Energy Information Administration finds production will decline in most of the Lower 48 states and Alaska because of the pressure from lower crude oil prices. Total U.S. crude oil production declined from the 9.1 million bpd expected during the first quarter of the year to an average 7.9 million bpd by third quarter 2017.
CEO Tony Sanchez said the results showed the company was able to perform well under the pressure from lower crude oil prices, despite the drop in oil production.
"With these results, we believe we are now drilling and completing wells at some of the lowest cost levels reported in unconventional oil and gas development," he said in a statement.
Sanchez in January announced plans to cut spending by about $50 million. The company entered 2015 with plans to cut spending by about 60 percent compared with fourth quarter 2014.
Strong production trends in the United States and weakened global demand pushed crude oil prices down from highs about $100 per barrel in mid-2014, leading to a sustained level at around $40 per barrel for much of the latter half of first quarter 2016. That's left companies with little spare capital to invest in exploration and production.
Much of the focus for Sanchez is in the Catarina section of the Eagle Ford shale reserve area in Texas. The company said drilling costs at the Catarina shale "continue to trend downward," with some wells running at about 9 percent below the field's average.
