Houston-based Sanchez Energy plans to slash its 2015 drilling budget by between $250 million and $300 million and temporarily step back from drilling in the Tuscaloosa Marine Shale, where the company has 61,000 acres under lease.
The company now has 13 rigs operating on its leases. Three of those are in the Tuscaloosa. The company’s preliminary 2015 budget called for one rig to work the Tuscaloosa through the year. Sanchez said the rig is expected to operate only through the early part of 2015.
Sanchez had planned to spend $1.1 billion to $1.2 billion on its 2015 drilling program, but the recent downturn in oil prices forced the company to revise its capital budget.
Sanchez will focus on its properties in Texas’ Eagle Ford Shale, where well costs are lower and the rates of return are higher.
Oil industry analysts have said the fledgling Tuscaloosa Marine Shale, which stretches across the center of Louisiana into Mississippi, is susceptible to low oil prices, more so than more mature, prolific formations elsewhere in the country.
The temporary spending shift by Sanchez doesn’t diminish the company’s expectations in the TMS, it said. Sanchez’s results, and those of other players in the formation, continue to improve and are meeting or exceeding expectations, the company said.