Oil & Gas - Energy - Commodities - Resources (OILBRENT)

[Timothy Smith]

$SN - Sanchez Energy (NYSE:SN) announced that it was launching a 10 million share offering to raise funds for general corporate purposes. This move makes sense since Sanchez is depleting close to 80% of its approximate $500 million year-end cash balance to fund its Comanche acquisition. Sanchez has a significant amount of debt and will likely burn money during 2017 to grow its exit rate production and set itself up for a strong 2018, so replenishing part of its cash pile is a prudent decision. I believe that Sanchez's shares still retain a fair bit of potential upside despite the additional dilution, although attention should be paid to its increasing share count (as a result of the equity offering, as well as the issuance of warrants and shares as part of the Comanche partnership).