Sanchez Oil and Gas

Sanchez Oil & Gas and a pair of its subsidiaries have been making moves in recent months amid the continued commodities crunch, with one of the entities announcing Monday that it had chosen a new chief financial officer.

Gleeson Van Riet has been named the new senior vice president and CFO of Sanchez Energy, an Eagle Ford Shale centered exploration and production company under the Sanchez umbrella. Van Riet, who was Sanchez’ senior vice president over capital markets and investor relations, replaced Mike Long, who stepped down as CFO at the end of April.

Recently, the Houston-based family of companies began entering the popular master limited partnership space after acquiring much of Houston-based Constellation Energy Partners LLC. Constellation last year was changed into Sanchez Production Partners LP, or SPP. But in March, the company was formed into an MLP structure.

The SPP moves were described as a means to better integrate Sanchez with the entity formerly known as Constellation. The old Constellation CEO, Stephen Brunner, left and SPP was moved into Sanchez’s downtown Houston offices in March. Sanchez CEO Tony Sanchez III, a third-generation family CEO, became the new SPP chairman.

Afterwards, SPP paid $85 million to Sanchez Energy for the drop down of nearly 60 wellbores in the Eagle Ford Shale, as well as a greater ownership interest in other regional assets. Likewise, SPP put its Mid-Continent assets for sale in Oklahoma and Kansas to focus on its core exploration and production areas. Those assets have not yet sold.

Tony Sanchez III said similar deals between SPP and Sanchez Energy are very repeatable in the future and that they could also include midstream assets. The goal is to create more production growth opportunities and financial efficiency to benefit stakeholders. In turn, Sanchez Energy is able to reduce some of its debt by unloading assets during a period of lower oil prices.

SPP, which only has a market cap of $55 million compared to Sanchez Energy’s $691 million value, now has more than $100 million in debt though, according to SPP’s earnings call on Monday. The plan is to cut into that through the planned Mid-Continent assets sale and then to grow in core Texas areas.

“We believe the Eagle Ford acquisition (from Sanchez Energy) sets the stage for other similar and potentially larger transactions in 2015 and beyond, which … may also involve the acquisition of integrated midstream assets, ” SPP interim CEO Gerald Willinger said in Monday’s conference call. ” We believe a large-scale transaction will be key to recapitalizing SPP and resuming distributions to our unitholders.”

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