Sanchez Energy (NYSE: SN) reported Q2 EPS of ($0.71), versus $0.07 reported last year. Revenue for the quarter came in at $259.31 million versus the consensus estimate of $248.51 million.

“The second quarter 2018 was a challenging operational quarter at Comanche, as we continued to see higher than projected production declines from wells brought on-line during the second half of 2017 and early 2018,” said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. “As discussed last quarter, the key issues leading to these decline rates include: (1) poor Upper Eagle Ford well performance in several of the delineation and step-out areas, (2) the testing of a more aggressive flowback strategy that resulted in well decline rates in excess of legacy well production profiles, (3) the use of hybrid completion designs, and (4) tighter spacing of the drilled-but-uncompleted wells acquired with the Comanche acquisition.

“A proactive effort to stabilize and improve production performance is already underway, including shifting back to a more conservative choke flowback plan which began at the start of the second quarter. The positive production results from the latest wells on restrictive chokes gives us confidence that we will return to organically growing production in the coming months.

“Additionally, we have implemented an optimization strategy to adjust completion designs based on well spacing and geological characteristics in specific areas at Comanche. The asset, which encompasses a large and complex acreage position, consists of approximately 318,000 gross acres and spans both the volatile oil and the gas condensate windows of the Eagle Ford shale trend. With a year of operating experience at Comanche, Sanchez Energy is significantly better positioned to tailor completion methods and designs optimally to the different areas of the asset.

“Similar to our enhanced performance at Catarina over the last 12 months, where after encountering production issues in the first half of 2017 we took corrective actions and have since grown production by over 23 percent, we are confident that our work to improve the performance of Comanche is on the right course.

“We will not stop at these corrective actions in our drive to gain operational efficiencies and to enhance production and margin capture. Accordingly, management and our board of directors have engaged a leading global consulting firm to assist with a comprehensive review of the Company’s performance across all aspects of the business, with a specific focus on operational and technical strategies. The goal of this review is to further enhance production and operating margins in order to achieve the financial performance Sanchez Energy’s shareholders expect. We believe this effort, combined with the proactive initiatives already underway, will lead to improved operational, production, and financial performance that will ultimately deliver enhanced shareholder returns.”

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