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Sanchez News Release- Further Analysis...

Posted by bernell on October 24, 2014

While we hate picking the Sanchez operating update apart, physics is difficult to overcome.

So, in the absence, or vacuum, of other accurate, timely information on the TMS, we’ll examine the information we do have a bit more closely to fill the void.

The last line of the Sanchez News Release, first posted by us yesterday in the link at the bottom, reads, as follows:

"The Company currently expects the rig in the TMS to drill continuously through the remainder of this year as well as through 2015."

So, I’m going to guess, including the Morris 1H being drilled now, Sanchez plans to drill 9 - 11 gross wells between now and next December. (I've been assured privately by someone who is not an insider that the maximum number of wells that will be drilled will be 6.  And, that could be entirely true...I was just basing my numbers off of a reasonable guess of drilling times.)

That’s good news.

Also, examining the news release a bit more, Sanchez has had great drilling times (excluding the redrill of the Dry Fork East lateral), so far.  We now know that is due, in part, to the shorter laterals, but also it is due to drilling in the upper TMS landing zone.  The upper zone can be drilled much faster. 

Unfortunately, according to Goodrich earlier this year, landing in the upper zone isn’t as productive and had the issue with them of causing problems with plug drill outs. 

Sanchez didn't report a plug drill out problem on the Dry Fork East, so I'm not sure how they have addressed this portion of the problem. 

I’d love to sit in a room with these operating companies and listen to them discuss the different philosophies and what their reasoning is for choosing one route over another. 

Drilling/completion practices aren’t as uniform as we once thought, it seems.

Here's our original post on the Sanchez Operational Update.

What do you think about it?