Sanchez Energy Corp. (NYSE: SN) has entered into agreements pursuant to which and upon closing Sanchez Energy would acquire approximately 40,000 net undeveloped acres in the core of the Tuscaloosa Marine shale trend for cash and shares of its common stock plus an initial 3 well drilling carry.

TRANSACTION HIGHLIGHTS

Pursuant to the terms of the agreements, Sanchez Energy established an area of mutual interest (AMI) with its affiliate SR Acquisition I LLC in the Tuscaloosa Marine shale (TMS). As part of the transaction, Sanchez Energy will acquire all of the working interests in the AMI owned by an unaffiliated private equity firm plus a portion of SR's working interests, resulting in Sanchez Energy owning an undivided 50% working interest across the AMI through the TMS formation. The AMI holds rights to approximately 115,000 gross acres and 80,000 net acres.

  • Total consideration for the transactions will be approximately $78 million consisting of $70 million of cash and 342,760 shares of common stock (valued at approximately $8.2 million based on the closing price per share as of August 7). SR will receive approximately $13.5 million in cash for the sale of its interest and the balance of the common stock and cash will be paid to unaffiliated third parties, including the previously mentioned private equity firm which made its initial investment in 2010.
  • Sanchez Energy has further committed, as a part of the total consideration, to carry SR for its 50% working interest in an initial three gross (1.5 net) TMS wells to be drilled within the AMI and at Sanchez Energy's election it may carry SR in an additional three gross (1.5 net) TMS wells if it desires to participate in additional drilling within the AMI.