Sanchez Production to acquire stake in Carnero Processing

Sanchez Production Partners (SPP) has signed a $47.7m agreement to acquire Sanchez Energy’s 50% interest in Carnero Processing.  

The remaining capital commitments to Carnero Processing are expected to be around $32.3m.

SPP will also acquire certain non-core producing oil and gas assets in South Texas, US, from Sanchez Energy for $27m.

This transaction includes working interests in 23 producing Eagle Ford wellbores in Dimmit and Zavala counties in South Texas together with interests in another 11 producing wellbores in the Palmetto Field in Gonzales County, Texas.

The company will also obtain an option to acquire a lease that is currently held by Sanchez Energy’s wholly owned subsidiary, for a tract of land leased from the Calhoun Port Authority in Point Comfort, Texas.

Sanchez Energy and Targa Resources jointly own the Carnero Processing, which is constructing a cryogenic natural gas processing plant in La Salle County, Texas.

Sanchez Energy entered the joint venture with Targa in October last year and has since invested around $40.2m in Carnero Processing.

The company has capacity for 125,000Mcf/d of plant processing, as well as associated pipeline capacity for five years.

Sanchez Energy plans to spend two-thirds of its drilling and completion budget for this year at Catarina.

Sanchez Energy CEO Tony Sanchez, III said: “Proceeds from the transactions, which are expected to close in the fourth quarter 2016, are expected to enhance the company’s already strong liquidity position which, as of the end of the third quarter 2016, totaled approximately $629m, consisting of approximately $329m in cash and cash equivalents and an undrawn bank credit facility with an elected commitment amount of $300m.”