Sanchez Energy Corp. (NYSE: SN) said Dec. 4 it has engaged Moelis & Co. LLC as financial adviser to explore strategic alternatives to strengthen its balance sheet and maximize the value of the Eagle Ford-focused company.
So far this year, Sanchez has faced three straight quarters of production declines and analysts with Capital One Securities recently said the company appears to be insolvent with about $3.1 billion of asset value and roughly $3.7 billion of net liabilities and corporate overhead.
Tony Sanchez III, president and CEO of Sanchez Energy, said the company has been focused on taking critical steps throughout the year to stabilize its production profile and reduce the capital intensity of the business.
“However, these operational challenges, combined with volatility in the commodity markets and the company’s leverage, led the company to review opportunities to improve its financial flexibility for continued success in the future,” Sanchez said in a statement.
Sanchez Energy and its management are evaluating strategic alternatives to help provide the company with financial stability, but no assurances can be given as to the outcome or timing of the process, according to the company press release.
The company does not intend to make any future announcements concerning this process unless and until the company otherwise determines that disclosures are necessary or appropriate, the release said.
Occidental Petroleum launched a $57 billion takeover bid for Anadarko Petroleum on April 24, trumping Chevron’s offer for The Woodlands, Texas-based independent announced earlier this month.
An undisclosed company agreed to buy Callon’s position in the Ranger operating area, comprised of 9,850 net acres in the southern Midland Basin of the Permian.
Laredo Petroleum, which operates primarily in the Permian Basin, expects the personnel cost reduction to result in roughly $30 million of annualized savings.