U.S. shale player Sanchez Energy said second quarter production was better than expected even as oil prices hold steady in the mid $40 range. File photo by Gary C. Caskey/UPI | License Photo
HOUSTON, July 19 (UPI) -- U.S. shale oil and natural gas company Sanchez Energy said, during an era of lower crude oil prices, net production during the second quarter improved.
"With the combination of lower costs and strong production, we continue to see attractive returns on the company's capital program," CEO Tony Sanchez III, said in a statement.
Drilling into part of the Eagle Ford shale basin in Texas, the company said second quarter production was around 55,900 barrels of oil equivalent per day, a level about 4 percent higher year-on-year. Second quarter 2016 production was better by 7 percent than the company expected.
Total production was split relatively even among oil and natural gas.
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.
Sanchez in October received about $345 million in cash for the sale of its midstream, or transportation, assets in the western section of the shale basin.