Sanchez Energy Hits New 1.5-Year High

Shares of Sanchez Energy (SN) surged to a new high since June 2015 on Friday after it and funds managed by Blackstone’s (BX) Energy Partners said late Thursday they struck a 50/50 partnership to acquire Anadarko Petroleum’s (APC) working interest in approximately 318,000 gross operated acres in the Western Eagle Ford for approximately $2.3 billion.

SN was up 24% in recent trade with a new 52-week range of $2.06 to $10.93. The deal, which will be funded with cash on hand and commitments from financial partners and commercial banks, is expected to close in Q1.

“With the asset strategically located adjacent to our existing Catarina asset, we anticipate substantial operating synergies and other benefits arising from the scale and concentration of our Eagle Ford position,” Sanchez CEO Tony Sanchez said. “We project that Sanchez Energy will be producing in excess of 100,000 Boe/d while operating within cash flow in the next 12 to 18 months. Importantly, this transaction is expected to improve the company’s leverage ratio by over one turn in the next 12 to 18 months.”