UPDATE: Stifel Reiterates on Sanchez Energy Corp. on Multiple Positive Factors
In a report published Tuesday, Stifel analyst Michael Scialla reiterated a Buy rating on Sanchez Energy Corp. (NYSE: SN), and raised the price target from $25.00 to $36.00.
In the report, Stifel noted, “We are raising our NAV estimate to $36/share from $27 and our target price to $36 from $25 based on well performance, lower well costs, and tighter spacing assumptions. We are raising our Palmetto type curve to 700 MBoe from 600 MBoe, increasing our assumed drilling density to 60-acre spacing from 80-acres, and lowering our well cost to $9.0 million from $10.0 million. The change causes us to increase our unproved NAV for this area to $11/share from $9. The average rates of 14 wells with two months or more of production are exceeding our old and new type curves by 24% and 6%, respectively. Early data from Marathon Oil Corporation's 40-acre pilot test at Palmetto shows no material interference between wells. EOG Resources has seen similar results from 40-acre spacing on nearby acreage where it is now testing 20-acre density.”
Sanchez Energy Corp. closed on Monday at $29.26.
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