Market Overview

KLR Group: Buy Sanchez Energy

Share:

In a report published Tuesday, KLR analyst John Gerdes upgraded the rating on Sanchez Energy Corp (NYSE: SN) from Accumulating to Buy, while maintaining the $15 price target. Although the stock has underperformed the E&P sector since late April, there now is about 50 percent upside to the valuation.

"Our economic model anticipates Sanchez increases development across its asset portfolio from three to four net rigs this year to six net rigs in '16 and seven to eight net rigs in '17, assuming a robust commodity price recovery," Gerdes said.

Sanchez Energy intends to drill 58 net wells across its Catarina ranch in 2015, while developing Eagle Ford in western Cararin and demarcating Lower Eagle Ford in central and eastern Catarina. In addition, the company is in the process of conducting a one-rig program and intends to drill 11 net wells in Palmetto. The analyst expects the company to recover about 700 Mboe from Southern Palmetto, at a cost of $7-7.5 million.

Sanchez Energy's second test in the Tuscaloosa Marine Shale (TMS) produced about 60Mbo in the first four months, and the analyst expects this region to recover about 300 Mbo.

"The Upper TMS Morris #2H in Wilkinson County experienced completion issues during cleanout and the company plans to recover the lost bottomhole assembly late this year. Sanchez is drilling the Bloomer #2H in Wilkinson County and plans to drill three TMS wells in '15," Gerdes added.

Latest Ratings for SN

DateFirmActionFromTo
Aug 2018RBC CapitalDowngradesOutperformSector Perform
Apr 2018KLR GroupDowngradesBuyHold
Feb 2018Northland SecuritiesDowngradesOutperformMarket Perform

View More Analyst Ratings for SN
View the Latest Analyst Ratings

 

Related Articles (SN)

View Comments and Join the Discussion!

Posted-In: John Gerdes KLR GroupAnalyst Color Upgrades Analyst Ratings

Latest Ratings

StockFirmActionPT
ZENStifelUpgrades145.0
YNDXJefferiesDowngrades57.0
TVTYJefferiesUpgrades20.0
SIXJefferiesUpgrades30.0
SAVEJP MorganUpgrades25.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com