Aug. 07–Houston oil and gas producer Sanchez Energy Corp. posted a greater than expected loss for the second quarter as it lost tens of millions of dollars on futures contracts that lock in prices and declining production at new wells in parts of the Eagle Ford Shale.
The company said it lost nearly $35 million, or 71 cents a share, for the three months that ended June 30. Sanchez Energy Corp. earned profits of $30.4 million, or 40 cents a share, in the same period of 2017.
The company missed Wall Street expectations. Analysts surveyed my Bloomberg expected the company to post a loss of 6 cents a share.
Sanchez Energy Corp.’s loss includes a $43.6 million loss related to its hedging activities, which allow a company to sell its product at a set price in the future. The company said in an investor presentation that it has more than 20,000 barrels a day of oil hedged in the second quarter at $52.61 a barrel. In 2018 oil prices have been above $60 a barrel.
CEO Tony Sanchez III blamed higher than expected production declines from wells in the Comanche portion of Sanchez Energy’sEagle Ford holdings, which the company bought from Houston-based Anadarko Petroleum Corp. in 2017. He blamed the declining production in part on poor well performance and the use of new completion designs.
Sanchez Energy Corp. operates leases on approximately 285,000 acres of land in South Texas’ Eagle Ford Shale oil field.
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