Sanchez Energy Announces Second Quarter 2014 Financial Results and Updates Operations; Record Second Quarter Revenues Rise 157%

  Sanchez Energy Announces Second Quarter 2014 Financial Results and Updates
Operations; Record Second Quarter Revenues Rise 157% on 164% Higher Production

PR Newswire

HOUSTON, Aug. 6, 2014

HOUSTON, Aug. 6, 2014 /PRNewswire/ --Sanchez Energy Corporation (NYSE: SN)
(the "Company" or "Sanchez Energy"), today announced the Company's operating
and financial results for the second quarter 2014, which included the
following highlights:

HIGHLIGHTS FOR SECOND QUARTER 2014

  oRecord revenues of $151.7 million, an increase of 157% over the same
    period a year ago
  oAdjusted EBITDA, a non-GAAP financial measure defined below, of $112.5
    million, an increase of 160% over the same period a year ago
  oAdjusted Net Income, a non-GAAP financial measure defined below, of $11.5
    million, an increase of 98% compared to the same period a year ago
  oLiquidity of $811 million as of June 30, 2014 consisting of $386 million
    in cash and cash equivalents and a $437.5 million unused borrowing base
    (with a $425 million elected commitment amount) under our revolving credit
    facility
  oSubstantial reduction in drilling and completion costs per well, as
    detailed in the comments below
  oProduction of 1,859 MBOE (20,437 BOE/D), an increase of 164% over the same
    period a year ago and above the midpoint of the production guidance range
    of 19,000 to 21,000 BOE/D

MANAGEMENT COMMENTS

Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy,
commented: "As of August 1, 2014, Sanchez Energy has officially taken over all
operations at Catarina after a brief transition period with Shell. The
transition of operations has gone smoothly and the ramp up of Sanchez Energy
operations is ahead of schedule. We have fully staffed our operations at
Catarina and now have drilling, completion, and artificial lift installation
in progress. Additionally, now that we have achieved critical scale from the
Catarina assets, we are utilizing a dedicated frac spread as well as direct
sourcing of chemicals and proppant. We expect these factors will reduce
completions costs by an additional 30%, allowing flexibility to increase
fracture stage size or improve returns from a lower development cost.

"We plan to apply direct sourcing of chemicals and proppant in our other Eagle
Ford areas as the opportunities present themselves. In order to realize these
expected significant completion cost savings, some wells scheduled to be
completed in the third quarter will now be completed in the fourth quarter. As
a result of the production deferment, our third quarter production guidance
range of 37,000 to 41,000 BOE/D has been revised to 36,000 to 40,000 BOE/D
while our fourth quarter production guidance range of 45,000 to 49,000 BOE/D
has increased to 48,000 to 50,000 BOE/D. Production guidance for 2015 is
reaffirmed at a range of 53,000 BOE/D to 58,000 BOE/D.

"The second quarter of 2014 also marked the continued improvement in drilling
efficiencies in the early development of Wycross and Five Mile Creek and the
continuation of improvement in our Prost area. Total drilling and completion
costs in Marquis are now as low as $7.3 million per well, a major improvement
over our initial 2014 planned costs of $8.5 million per well. The lower cost
structure gives us confidence in our ability to continue to improve returns on
our current reserve base and add new inventory as we continue to step out and
appraise the entirety of our acreage using these improved drilling and
completion techniques."

OPERATIONS UPDATE

As detailed in the table below, Sanchez Energy currently has 9 gross rigs (6
operated and 3 non-operated) running across its Eagle Ford and TMS areas with
422 gross producing wells and 40 gross wells in various stages of completion.

                                          Gross
             Gross      Gross    Net      Wells Waiting /
Project      Producing  Rigs     Rigs     Undergoing
Area         Wells      Running  Running  Completion
Catarina     176        1        1        23
Marquis      63         3        3        10
Cotulla      119        1        1        5
Palmetto     61         1        1        -
TMS / Other  3          3        1        2
Total        422        9        7        40

PRODUCTION VOLUMES, AVERAGE SALES PRICES, OPERATING COSTS PER BOE, AND CAPITAL
EXPENDITURES

Sanchez Energy's mix of hydrocarbon production during the second quarter of
2014 consisted of approximately 73% crude oil, 14% natural gas liquids, or 87%
liquids, and 13% natural gas. By area, Cotulla, Marquis, and Palmetto
comprised approximately 42%, 31%, and 27% of total second quarter 2014
production volumes, respectively. The percentage of oil expected in the
Company's third quarter production volumes should decrease as the impact of
the production volumes from Catarina begin to flow through our results. Third
quarter volumes are expected to be approximately 50% oil and 27% NGLs, for a
total of 77% liquids.

Revenue for the three months ended June 30, 2014 totaled $151.7 million, an
increase of 157% over the same period a year ago, due to the addition of 133
gross new wells since the second quarter 2013, including 119 gross wells from
ongoing operations and 14 gross wells from the acquisition of new properties.

Production, average sales prices, and operating costs and expenses per BOE for
the second quarter 2014 as well as guidance for the third quarter and fourth
quarter of 2014 are summarized below:

                              Three Months Ended       Six Months Ended
                              June 30,                 June 30,
                              2014         2013        2014         2013
Production volumes -
 Oil (MBo)                   1,356        541         2,575        818
 NGLs (MBbls)                262          84          514          125
 Natural gas (MMcf)          1,445        470         2,767        688
 Total oil equivalent      1,859        703         3,550        1,058
(MBOE)
  BOE/Day                   20,437       7,726       19,615       5,845
Average sales price, excluding the impact
of derivative instruments -
 Oil ($ per Bo)              $ 100.90    $ 101.42    $  99.63   $ 102.94
 NGLs ($ per Bbl)            $  30.96   $  24.48   $  32.32   $  23.78
 Natural gas ($ per Mcf)     $   4.60  $   4.61  $   4.71  $   4.28
  Oil equivalent ($ per     $  81.55   $  84.05   $  80.62   $  85.19
BOE)
Average sales price, including the impact
of derivative instruments -
 Oil ($ per Bo)              $  97.12   $ 100.10    $  96.78   $ 101.15
 NGLs ($ per Bbl)            $  30.96   $  24.48   $  32.32   $  23.78
 Natural gas ($ per Mcf)     $   4.46  $   4.61  $   4.47  $   4.28
 Oil equivalent ($ per     $  78.68   $  83.03   $  78.36   $  83.81
BOE)
Operating costs and expenses
($/BOE):
 Oil and natural gas         $   7.48  $   9.69  $   8.40  $   9.52
production expenses
 Production and ad valorem   $   4.21  $   4.78  $   5.13  $   5.12
taxes
 General and
administrative, excluding
stock based compensation and  $   6.47   $  7.09   $   6.03   $  8.48
acquisition costs included
in G&A ^(1)

(1) Excludes stock-based compensation of $8.57 and $6.51 per BOE for the three
months ended June 30, 2014 and 2013, respectively,and $7.29 and $7.29 per BOE
for the six months ended June 30, 2014 and 2013, respectively. Excludes
acquisition costs included inG&A of $0.48 and $4.37 per BOE for the three
months ended June 30, 2014 and 2013, respectively, and $0.25 and $3.49 per
BOEfor the six months ended June 30, 2014 and 2013, respectively.

                            Guidance
                            3Q14                      4Q14
Production (BOE/D)          36,000      - 40,000      48,000      - 50,000
Operating costs and
expenses:
 Oil and natural gas
production expenses         $   8.00 - $   9.00  $   8.00 - $   9.00
($/BOE)
 Production and ad
valorem taxes (% of         7.0%        - 8.0%        7.0%        - 8.0%
revenue)
 Cash G&A ($/BOE)          $   3.00 - $   4.00  $   3.00 - $   4.00

Sanchez Energy announced that proved reserves from its assets excluding
Catarina increased to approximately 60 MMBOE as of June 30, 2014. Inclusive of
the Catarina acquisition, the Company's proved reserves total approximately
117 MMBOE as of June 30, 2014, an increase of over 170% relative to the
balance as of June 30, 2013. Crude oil constituted 49% and NGLs constituted
24% (73% liquids) of the Company's proved reserves as of June 30, 2014, and
56% of the Company's proved reserves were classified as proved undeveloped as
of June 30, 2014 as compared to 70% at June 30, 2013. The Company's estimated
reserves were prepared by its independent reservoir engineering firm, Ryder
Scott & Company, L.P.

Capital expenditures, before estimated accruals, for the second quarter 2014
were approximately $225 million, and capital expenditures incurred during the
second quarter, including accruals, were approximately $191 million. 

HEDGING UPDATE

During the second quarter of 2014 and subsequent to quarter end, Sanchez
Energy entered into additional derivative contracts covering anticipated
future production in 2014 and 2015. Sanchez Energy currently has approximately
3.5 million barrels of anticipated crude production and 4.1 Bcf of gas
production for 2014 hedged, or approximately 4.1 million BOE, which represents
approximately 40% of its anticipated total 2014 production at the mid-point of
its guidance range. Approximately 5.7 million BOE are currently hedged for
2015, which represents approximately 25% to 30% of anticipated production at
the mid-point of the guidance range. A schedule of all current hedges for 2014
and 2015 production is included herein.

SHARE COUNT

As of June 30, 2014, the Company had 58,125,398 total shares outstanding with
a quarterly weighted average outstanding share count of 53,051,116, as a
result of a follow-on offering of common stock of 5,000,000 shares on June 12,
2014. If all Series A and Series B Convertible Perpetual Preferred Stock were
assumed to be converted, total shares outstanding as of June 30, 2014 would
have been 70,766,531.

CONFERENCE CALL

Sanchez Energy will host a conference call for investors on August 7, 2014 at
2:00 p.m. EDT (1:00 p.m. CDT, 12:00 p.m. MDT and 11:00 a.m. PDT,
respectively). Interested investors can listen to the call by visiting our
website at www.sanchezenergycorp.com and clicking on the Second Quarter 2014
Conference Call button. Webcast, both live and rebroadcast, will be available
over the internet at:
http://edge.media-server.com/m/p/5koskuks/lan/en

ABOUT SANCHEZ ENERGY CORPORATION

Sanchez Energy Corporation is an independent exploration and production
company focused on the acquisition and development of unconventional oil
resources in the onshore U.S. Gulf Coast, with a current focus on the Eagle
Ford Shale in South Texas where we have assembled approximately 224,000 net
acres and the Tuscaloosa Marine Shale in Mississippi and Louisiana where we
have assembled approximately 58,000 net acres. For more information about
Sanchez Energy Corporation, please visit our website:
www.sanchezenergycorp.com

FORWARD LOOKING STATEMENTS

This press release contains, and our officers and representatives may from
time to time make, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that Sanchez Energy expects, believes or anticipates will or may occur in the
future are forward-looking statements, including statements relating to the
anticipated benefits of our acquisitions, any planned takeover of operations,
and the rate of development of new plays that we enter into. These statements
are based on certain assumptions made by the company based on management's
experience, perception of historical trends and technical analyses, current
conditions, anticipated future developments and other factors believed to be
appropriate and reasonable by management. When used in this press release, the
words "will," "potential," "believe," "estimate," "intend," "expect," "may,"
"should," "anticipate," "could," "plan," "predict," "project," "profile,"
"model," "strategy," "future," or their negatives, other similar expressions
or the statements that include those words, are intended to identify
forward-looking statements, although not all forward-looking statements
contain such identifying words.

Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of Sanchez Energy, which
may cause actual results to differ materially from those implied or expressed
by the forward-looking statements, including, but not limited to failure of
acquired assets to produce as anticipated, failure to successfully integrate
acquired assets, failure to continue to produce oil and gas at historical
rates, costs of operations, delays, and any other difficulties related to
producing oil or gas, the price of oil or gas, marketing and sales of produced
oil and gas, estimates made in evaluating reserves, competition, general
economic conditions and the ability to manage and continue growth and other
factors described in Sanchez Energy's Annual Report for the fiscal year ended
December 31, 2013 and any updates to those risk factors set forth in Sanchez
Energy's Quarterly Reports on Form 10-Q. Further information on such
assumptions, risks and uncertainties is available in Sanchez Energy's filings
with the Securities and Exchange Commission ("SEC"). Sanchez Energy's filings
with the SEC are available on its website at www.sanchezenergycorp.com and on
the SEC's website at www.sec.gov. In light of these risks, uncertainties and
assumptions, the events anticipated by Sanchez Energy's forward-looking
statements may not occur, and, if any of such events do occur, Sanchez Energy
may not have correctly anticipated the timing of their occurrence or the
extent of their impact on its actual results. Accordingly, you should not
place any undue reliance on any of Sanchez Energy's forward-looking
statements. Any forward-looking statement speaks only as of the date on which
such statement is made and Sanchez Energy undertakes no obligation to correct
or update any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by applicable law.

CAUTIONARY NOTE TO U.S. INVESTORS

The SEC permits oil and gas companies, in their filings with the SEC, to
disclose proved, probable and possible reserves. We may use certain terms in
our press releases, such as net resource potential and other variations of the
foregoing terms that the SEC's guidelines strictly prohibit us from including
in filings with the SEC. U.S. Investors are urged to consider closely the
reserves disclosures in our filings with the SEC available on our website at
www.sanchezenergycorp.com and the SEC's website at www.sec.gov. You can also
obtain this information from the SEC by calling its general information line
at 1-800-SEC-0330.

Company contact:

Michael G. Long
Executive Vice President and Chief Financial Officer
Sanchez Energy Corp.
713-783-8000

Gleeson Van Riet
Senior Vice President, Capital Markets and Investor Relations
Sanchez Energy Corp.
713-783-8000

(Financial Highlights to follow)



SANCHEZ ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(unaudited)
                            Three Months Ended        Six Months Ended
                            June 30,                  June 30,
                            2014          2013        2014          2013
                            (in thousands, except per share amounts)
REVENUES:
 Oil sales                 $  136,902   $  54,872  $  256,577   $  84,199
 Natural gas liquids       8,116         2,047       16,609        2,976
sales
 Natural gas sales         6,643         2,166       13,037        2,946
  Total revenues         151,661       59,085      286,223       90,121
OPERATING COSTS AND
EXPENSES:
 Oil and natural gas       13,911        6,813       29,823        10,072
production expenses
 Production and ad         7,842         3,361       18,245        5,411
valorem taxes
 Depreciation, depletion,  70,583        24,623      131,834       37,996
amortization and accretion
 General and
administrative (inclusive
of stock-based
compensation expense of
$15,943 and $4,578,
respectively, for the       28,869        12,632      48,178        20,369
three months ended June
30, 2014 and 2013, and
$25,878 and $7,712,
respectively, for the six
months ended June 30, 2014
and 2013.
  Total operating costs  121,205       47,429      228,080       73,848
and expenses
Operating income            30,456        11,656      58,143        16,273
Other income (expense):
 Interest and other        3             51          15            72
income
 Interest expense          (17,261)      (7,069)     (30,533)      (8,153)
 Net gains (losses) on     (31,900)      4,252       (41,017)      624
commodity derivatives
 Total other expense, net  (49,158)      (2,766)     (71,535)      (7,457)
Income (loss) before        (18,702)      8,890       (13,392)      8,816
income taxes
Income tax benefit          (6,544)       -           (4,679)       -
Net income (loss)           (12,158)      8,890       (8,713)       8,816
Less:
 Preferred Stock           (7,132)       (5,484)     (25,325)      (7,556)
dividends
 Net income allocable to   -             (159)       -             (56)
participating securities
Net income (loss)
attributable to common      $ (19,290)   $  3,247   $ (34,038)   $  1,204
stockholders
Net income (loss) per       $                       $  
common share - basic and    (0.38)       $   0.10  (0.70)       $   0.04
diluted ^(2)(3)
Adjusted EBITDA, as         $ 112,536     $ 43,211    $ 208,729     $ 64,205
defined ^(1)
Adjusted net income
attributable to common      $  11,530    $  5,802   $  20,853    $ 10,105
stockholders, as defined
^(1)
Adjusted net income per
common share - basic and    $    0.23  $   0.17  $    0.43  $   0.30
diluted^(1)(2)(3)
Weighted average number of
shares used to calculate
net income (loss) and
Adjusted net income         50,602        33,485      48,825        33,292
attributable to common
stockholders - basic and
diluted ^(2)(3)

^(1)  Adjusted EBITDA, Adjusted net income attributable to common stockholders
      and Adjusted net income per common share are defined below.
      The three and six months ended June 30, 2014 excludes 423,771 and
      829,375 shares of weighted average restricted stock and 13,253,510 and
      14,502,257 shares of common stock resulting from an assumed conversion
^(2) of the Company's Series A Convertible Perpetual Preferred Stock and
      Series B Convertible Perpetual Preferred Stock from the calculation of
      the denominator for diluted earnings per common share and diluted
      Adjusted net income per common share as these shares were anti-dilutive.
      The three and six months ended June 30, 2013 excludes 208,130 and
      539,141 shares of weighted average restricted stock and 17,491,500 and
      12,466,950 shares of common stock resulting from an assumed conversion
^(3) of the Company's Series A Convertible Perpetual Preferred Stock and
      Series B Convertible Perpetual Preferred Stock from the calculation of
      the denominator for diluted earnings per common share and diluted
      Adjusted net income per common share as these shares were
      anti-dilutive.





SANCHEZ ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
                                                  June 30,       December 31,
                                                  2014           2013
ASSETS:                                           (In thousands)
 Cash and cash equivalents                       $  385,871   $  153,531
 Oil and natural gas receivables                 56,456         51,960
 Joint interest billing receivables              15,470         5,803
 Fair value of derivative instruments, current   63             -
 Deferred tax asset, current                     18,471         6,882
 Other current assets                            5,893          1,386
 Oil and natural gas properties, net             2,163,114      1,385,488
 Fair value of derivative instruments, long      108            1,304
term
 Debt issuance costs, net                        45,157         19,806
 Other assets                                    13,450         2,993
TOTAL ASSETS                                      $ 2,704,053    $ 1,629,153
LIABILITIES AND STOCKHOLDERS' EQUITY:
 Accounts payable                                $   11,663  $   46,900
 Accounts payable - related entities             1,888          961
 Other payables                                  6,907          2,963
 Accrued liabilities                             123,550        102,455
 Deferred premium liability, current             3,143          717
 Fair value of derivative instruments, current   27,148         4,623
 Long term debt, net of discount                 1,443,710      593,258
 Asset retirement obligation                     22,626         4,130
 Deferred tax liability, long term               17,778         10,868
 Deferred premium liability, noncurrent          2,466          4,891
 Fair value of derivative instruments, long      9,421          78
term
 Stockholders' equity                            1,033,753      857,309
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 2,704,053    $ 1,629,153





SANCHEZ ENERGY CORPORATION
HEDGING ACTIVITY SUMMARY



As of June 30, 2014, the Company had the following crude oil swaps, collars,
and put spreads covering anticipated future production:

Contract Period          Derivative  Barrels  Purchased  Sold    Pricing Index
                         Instrument
July 1, 2014 - December  Swap        138,000  $92.00     n/a     NYMEX WTI
31, 2014
July 1, 2014 - December  Swap        138,000  $91.35     n/a     NYMEX WTI
31, 2014
July 1, 2014 - December  Swap        138,000  $92.45     n/a     NYMEX WTI
31, 2014
July 1, 2014 - December  Swap        184,000  $95.45     n/a     NYMEX WTI
31, 2014
July 1, 2014 - December  Swap        184,000  $93.25     n/a     NYMEX WTI
31, 2014
January 1, 2015 -        Swap        365,000  $89.65     n/a     NYMEX WTI
December 31, 2015
January 1, 2015 -        Swap        365,000  $90.05     n/a     NYMEX WTI
December 31, 2015
January 1, 2015 -        Swap        365,000  $88.48     n/a     NYMEX WTI
December 31, 2015
January 1, 2015 -        Swap        365,000  $88.35     n/a     NYMEX WTI
December 31, 2015
July 1, 2014 - December  Collar      184,000  $90.00     $99.10  NYMEX WTI
31, 2014
July 1, 2014 - December  Put Spread  184,000  $90.00     $75.00  NYMEX WTI
31, 2014



As of June 30, 2014, the Company had the following crude oil enhanced swaps
covering anticipated future production:

Contract Period                      Barrels  Purchased  Put     Pricing Index
January 1, 2015 - December 31, 2015  365,000  $91.46     $75.00  NYMEX WTI
January 1, 2015 - December 31, 2015  365,000  $93.13     $75.00  NYMEX WTI
January 1, 2015 - December 31, 2015  365,000  $92.20     $75.00  NYMEX WTI
January 1, 2015 - December 31, 2015  365,000  $91.46     $75.00  NYMEX WTI



As of June 30, 2014, the Company had the following natural gas swaps and
collars covering anticipated future production:

Contract Period           Derivative  Mmbtu    Purchased  Sold   Pricing Index
                          Instrument
July 1, 2014 - December   Swap        368,000  $4.23      n/a    NYMEX NG
31, 2014
July 1, 2014 - December   Swap        368,000  $4.23      n/a    NYMEX NG
31, 2014
July 1, 2014 - December   Swap        368,000  $4.24      n/a    NYMEX NG
31, 2014
July 1, 2014 - December   Swap        368,000  $4.61      n/a    NYMEX NG
31, 2014
July 1, 2014 - December   Collar      368,000  $4.00      $4.50  NYMEX NG
31, 2014



As of June 30, 2014, the Company had the following natural gas enhanced swaps
covering anticipated future production:

Contract Period                     Mmbtu      Purchased  Put    Pricing Index
January 1, 2015 - December 31,      2,190,000  $4.44      $3.75  NYMEX NG
2015
January 1, 2015 - December 31,      1,095,000  $4.40      $3.75  NYMEX NG
2015
January 1, 2015 - December 31,      730,000    $4.50      $3.75  NYMEX NG
2015



As of June 30, 2014, the Company had the following three-way crude oil collar
contracts that combine a long and short put with a short call:

Contract Period        Barrels  Short Put  Long Put  Short call  Pricing Index
July 1, 2014 -         276,000  $65.00     $85.00    $102.25     NYMEX WTI
December 31, 2014
July 1, 2014 -         184,000  $75.00     $95.00    $107.50     LLS
December 31, 2014
July 1, 2014 -         184,000  $75.00     $90.00    $96.22      NYMEX WTI
December 31, 2014
January 1, 2015 -      365,000  $70.00     $85.00    $95.00      NYMEX WTI
December 31, 2015
January 1, 2015 -      365,000  $70.00     $85.00    $95.00      NYMEX WTI
December 31, 2015
January 1, 2015 -      365,000  $70.00     $85.00    $94.75      NYMEX WTI
December 31, 2015



Subsequent to quarter end, the Company entered into the following three-way
crude oil and natural gas collar contracts that combine a long and short put
with a short call:

Contract Period          Barrels    Short Put  Long Put  Short Call  Pricing
                                                                     Index
January 1, 2015 -        365,000    $75.00     $90.00    $97.00      NYMEX WTI
December 31, 2015
January 1, 2015 -        365,000    $75.00     $90.00    $97.25      NYMEX WTI
December 31, 2015
Contract Period          Mmbtu      Short Put  Long Put  Short Call  Pricing
                                                                     Index
July 1, 2014 - December  2,590,000  $3.50      $4.00     $4.90       NYMEX NG
31, 2015
July 1, 2014 - December  2,590,000  $3.50      $4.00     $4.90       NYMEX NG
31, 2015



SANCHEZ ENERGY CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)

I. Adjusted EBITDA is used as a supplemental financial measure by our
management and by external users of our financial statements, such as
investors, commercial banks and others, to assess our operating performance as
compared to that of other companies in our industry, without regard to
financing methods, capital structure or historical costs basis. It is also
used to assess our ability to incur and service debt and fund capital
expenditures. We define Adjusted EBITDA as net income (loss):

Plus:

  oInterest Expense, including net losses (gains) on interest rate derivative
    contracts;
  oNet losses (gains) on commodity derivatives;
  oNet settlements on commodity derivatives;
  oPremiums (paid) on commodity derivative contracts;
  oDepreciation, depletion, amortization, and accretion;
  oStock-based compensation expense;
  oAcquisition costs included in general and administrative;
  oIncome tax expense (benefit);
  oLoss (gain) on sale of oil and natural gas properties;
  oImpairment of oil and natural gas properties; and
  oOther non-recurring items that we deem appropriate.

Less:

  oInterest income; and
  oOther non-recurring items that we deem appropriate.

The following table presents a reconciliation of our net income (loss) to
Adjusted EBITDA (in thousands):

                                 Three Months Ended     Six Months Ended
                                 June 30,               June 30,
                                 2014        2013       2014         2013
Net income (loss)                $ (12,158)  $  8,890  $  (8,713)  $  8,816
Plus:
 Interest expense               17,261      7,069      30,533       8,153
 Net losses (gains) on          31,900      (4,252)    41,017       (624)
commodity derivatives
 Net settlements on commodity   (5,336)     (260)      (8,016)      (556)
derivatives
 Premiums paid on commodity     -           (455)      -            (905)
derivative contracts
 Depreciation, depletion,       70,583      24,623     131,834      37,996
amortization and accretion
 Stock-based compensation       15,943      4,578      25,878       7,712
 Acquisition costs included in  890         3,069      890          3,685
G&A
 Income tax benefit             (6,544)     -          (4,679)      -
Less:
 Interest income                (3)         (51)       (15)         (72)
 Adjusted EBITDA                $ 112,536   $ 43,211   $ 208,729    $ 64,205

Our Adjusted EBITDA should not be considered an alternative to net income
(loss), operating income (loss), cash flow provided by or used in operating
activities or any other measure of financial performance or liquidity
presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable
to similarly titled measures of another company because all companies may not
calculate Adjusted EBITDA in the same manner.

II. We present Adjusted Net Income attributable to common stockholders
("Adjusted Net Income") in addition to our reported net income (loss) in
accordance with GAAP. This information is provided because management believes
exclusion of the impact of our unrealized derivatives not accounted for as
cash flow hedges and stock-based compensation expense will help investors
compare results between periods and identify operating trends that could
otherwise be masked by these items and to highlight the impact that commodity
price volatility has on our results. We define Adjusted Net Income as net
income (loss):

Plus:

  oNon-cash preferred stock dividends associated with conversion;
  oNet losses (gains) on commodity derivatives;
  oNet settlements on commodity derivatives;
  oPremiums (paid) on commodity derivative contracts;
  oStock-based compensation expense;
  oAcquisition costs included in general and administrative;
  oOther non-recurring items that we deem appropriate; and
  oTax impact of adjustments to net income (loss).

Less:

  oPreferred stock dividends; and
  oOther non-recurring items that we deem appropriate.

The following table presents a reconciliation of our net income (loss) to
Adjusted Net Income (in thousands, except per share data):

                                     Three Months Ended   Six Months Ended
                                     June 30,             June 30,
                                     2014        2013     2014       2013
Net income (loss)                    $ (12,158)  $ 8,890  $ (8,713)  $  8,816
 Less: Preferred stock dividends    (7,132)     (5,484)  (25,325)   (7,556)
Net income (loss) attributable to
common shares and participating      (19,290)    3,406    (34,038)   1,260
securities
Plus:
 Non-cash preferred stock
dividends associated with            3,112       -        17,013     -
conversion
 Net losses (gains) on commodity    31,900      (4,252)  41,017     (624)
derivative contracts
 Net settlements on commodity       (5,336)     (260)    (8,016)    (556)
derivative contracts
 Premiums paid on commodity         -           (455)    -          (905)
derivative contracts
 Stock-based compensation           15,943      4,578    25,878     7,712
 Acquisition costs included in      890         3,069    890        3,685
general and administrative
 Tax impact ^(1)                    (15,131)    -        (20,883)   -
Adjusted net income                  12,088      6,086    21,861     10,572
Adjusted net income allocable to     (558)       (284)    (1,008)    (467)
participating securities
Adjusted net income attributable to  $ 11,530   $ 5,802  $ 20,853   $ 10,105
common stockholders
Adjusted net income per common       $   0.23  $ 0.17  $  0.43  $  0.30
share - basic and diluted ^(2)(3)
Weighted average number of
unrestricted outstanding common
sharesused to calculate Adjusted    50,602      33,485   48,825     33,292
net income per common share- basic
and diluted ^(2)(3)

    The tax impact is computed by utilizing the Company's effective tax rate
(1) on the adjustments to reconcile net income to Adjusted net income but
    excludes non-cash preferred stock dividends associated with conversion.
    The three and six months ended June 30, 2014 excludes 423,771 and 829,375
    shares of weighted average restricted stock and 13,253,510 and 14,502,257
    shares of common stock resulting from an assumed conversion of the
(2) Company's Series A Convertible Perpetual Preferred Stock and Series B
    Convertible Perpetual Preferred Stock from the calculation of the
    denominator for diluted adjusted net income per common share as these
    shares were anti-dilutive.
    The three and six months ended June 30, 2013 excludes 208,130 and 539,141
    shares of weighted average restricted stock and 17,491,500 and 12,466,950
    shares of common stock resulting from an assumed conversion of the
(3) Company's Series A Convertible Perpetual Preferred Stock and Series B
    Convertible Perpetual Preferred Stock from the calculation of the
    denominator for diluted adjusted net income per common share as these
    shares were anti-dilutive.

Adjusted Net Income is not intended to represent cash flows for the period,
nor is it presented as a substitute for net income (loss), operating income
(loss), cash flows provided by or used in operating activities or any other
measure of financial performance or liquidity presented in accordance with
GAAP.

SOURCE Sanchez Energy Corporation

Website: http://www.sanchezenergycorp.com
 
Press spacebar to pause and continue. Press esc to stop.