Sanchez Energy (NYSE:SN) ended regular trading as one of the very few energy producers whose stock price held firmly higher through a miserable session, as its plan to sell certain Eagle Ford Shale midstream assets to Sanchez Production Partners (NYSEMKT:SPP) for $345M is seen as solving its liquidity problems.
SN also confirmed it expects Q3 average production likely will meet or exceed the high end of its previous guidance of 46K-50K boe/day; the company also remains confident it can build a 20-30 well bank toward its 50 wells/year drilling commencement at Catarina at its current rig count.
Northland Capital maintains its Outperform rating and $12 price target on SN, believing the proceeds from the asset sale will strengthen SN's liquidity position and set up the company for opportunistic acquisitions; even though SN previously discussed the possible sale of midstream assets, the move's value capture is "meaningfully positive" and underappreciated by the market.
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