HOUSTON, Jan. 12, 2017 (GLOBE NEWSWIRE) -- Sanchez Energy Corporation (NYSE:SN) announced today that it and funds managed by Blackstone Energy Partners (NYSE:BX) have entered a strategic 50/50 partnership and together they have signed a definitive purchase agreement to acquire Anadarko Petroleum Corporation’s (NYSE:APC) working interest in approximately 318,000 gross operated acres in the Western Eagle Ford for approximately $2.3 billion, subject to normal and customary closing conditions and purchase price adjustments (the “Comanche Eagle Ford Asset”). Sanchez Energy and Blackstone will use cash on hand and commitments received from financial partners and commercial banks to provide financing for the acquisition and anticipate that the transaction will close in the first quarter of 2017.

TRANSACTION OVERVIEW (UNLESS OTHERWISE NOTED, HIGHLIGHTS BELOW REFERENCE THE INTERESTS HELD 50/50 BY SN AND BLACKSTONE)

• Approximately 318,000 gross operated acres (155,000 net to Sanchez Energy and Blackstone), contiguous to the Company’s Catarina asset;
• Current production of approximately 67,000 Boe/d (70 percent liquids) from the acquired assets, provides a substantial amount of immediate cash flow;
• Proved reserves of approximately 300 MMBoe (70 percent liquids, 75 percent proved developed) from the acquired asset;
• Estimated total resource potential of over 1,100 MMBoe;
• Significant near-term, low-risk production growth driven by 132 gross drilled but uncompleted wells (“DUCs”) located in the most attractive areas of the asset, with individual rates of return expected to exceed 100 percent;
• More than 4,000 Eagle Ford drilling locations, which provides over 20 years of economic drilling inventory at current strip prices;
• Eagle Ford Shale development covers approximately 80 percent of the acreage, with significant resource potential from the Austin Chalk and Pearsall Shale;
• Sanchez Energy will fully fund its 50% of the acquisition through a combination of cash on hand and commercial bank and preferred equity commitments at a newly formed non-recourse subsidiary; and
• Blackstone will fund its 50% of the acquisition through a separate entity via equity and commercial bank commitments.

MANAGEMENT COMMENTS“ This accretive and transformative acquisition more than doubles our drilling inventory, adds 132 high rate of return DUCs, increases Sanchez Energy’s resource potential by over 550 MMBoe and provides a path for strong growth within projected cash flow,” said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. “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. Our continued focus on the Western Eagle Ford, expertise at multi-bench development, efficient cost structure and strong liquidity position will enable us to create significant value from the acquired assets.

“Upon completion of the acquisition, we will triple our exposure to the Upper and Middle Eagle Ford trends that have been successfully developed by the Company at Catarina. The Upper and Middle Eagle Ford sections thicken in Southern Dimmit County, where the majority of the acquired leasehold is concentrated. Upon closing the transaction, we believe we will have locked up the core of the trend within the volatile oil window. With the ability to duplicate the cost structure of our Catarina and Maverick operations throughout the Comanche Eagle Ford Asset, we expect to further improve operating efficiencies while enhancing our capability to achieve sustainability of well cost reductions over time.

“The Comanche Eagle Ford Asset generates free cash flow that can be allocated to help fund our 2017 capital budget and comes with a large inventory of high rate of return drilling opportunities that will build upon our already high quality drilling program. As a result, 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.

“We are looking forward to working collaboratively with Blackstone in the development of these assets and to facilitate the growth of the Company.”

Angelo Acconcia, a Senior Managing Director at Blackstone Energy Partners who oversees their oil and gas investments, said, “We are excited to form this strategic partnership with Sanchez Energy, to help effectuate this transformative acquisition and to help Sanchez Energy grow and facilitate future acquisitions in the area. Sanchez Energy is a best in class operator, with a synergistic asset base and is uniquely positioned to drive significant value from these assets and future acquisitions in the area.”

“Sanchez is positioned to accelerate growth based on its scale, proven operational capability and financial structure,” commented Robert Horn, Senior Managing Director of GSO Capital. “We are excited to partner on this transformative transaction and future opportunities with Sanchez Energy.”

COMANCHE EAGLE FORD ASSET FINANCING AND STRUCTURE Sanchez Energy’s portion of the acquisition will be funded utilizing two components. Through a restricted subsidiary, the Company expects to fund its portion of the acquisition with cash on hand. Additionally, a newly formed unrestricted subsidiary of Sanchez Energy (“UnSub”) will finance its portion of the acquisition with proceeds from non-convertible perpetual preferred equity issued to GSO Capital Partners LP (“GSO”), borrowings under a new revolving credit facility (non-recourse to SN), and a $100 million contribution in cash from Sanchez Energy. The preferred equity is structured to provide a 10 percent annual cash dividend and a 14 percent required return upon redemption to GSO and is not convertible into Sanchez Energy common stock. While the entirety of the transaction will be consolidated for financial reporting, the preferred equity and debt of UnSub will be non-recourse to SN.

ADVISOR SIntrepid Partners served as the sole financial advisor for Sanchez Energy. Intrepid Partners is the advisory business of Intrepid Financial Partners, an energy-focused merchant bank that provides merger & acquisition and restructuring advice and makes principal investments. Legal advice was provided by Akin Gump Strauss Hauer & Feld LLP and Kirkland & Ellis LLP. JPMorgan Chase & Co. and Citigroup Global Markets Inc. are acting as joint lead arrangers and joint bookrunning managers on the new secured credit facility.

ABOUT SANCHEZ ENERGY CORPORATION
Sanchez Energy Corporation (NYSE:SN) is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast, with a current focus on the Eagle Ford Shale in South Texas where we have assembled over 200,000 net acres, and the Tuscaloosa Marine Shale. For more information about Sanchez Energy Corporation, please visit our website: www.sanchezenergycorp.com.

ABOUT BLACKSTONE ENERGY PARTNERS
Blackstone Energy Partners is Blackstone's energy-focused private equity business, with a successful record built on our industry expertise and partnerships with exceptional management teams. Blackstone has invested over $10 billion of equity globally across a broad range of sectors within the energy industry.

Blackstone is one of the world's leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies in which we invest, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with over $360 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

ABOUT GSO CAPITAL PARTNERS
GSO Capital Partners LP is the global credit investment platform of Blackstone. With approximately $89 billion of assets under management, GSO is one of the largest alternative managers in the world focused on the leveraged-finance, or non-investment grade related, marketplace. GSO seeks to generate attractive risk-adjusted returns in its business by investing in a broad array of strategies including mezzanine debt, distressed investing, leveraged loans and other special-situation strategies. Its funds are major providers of credit for small and middle-market companies and they also advance rescue financing to help distressed companies.