Shares of Sanchez Energy Corp. (NYSE: SN) fell on Friday and were down 10% at 3:15 p.m. EST, after the Eagle Ford Shale driller provided an operational update.
Sanchez Energy released its operational results for the fourth quarter and full year. The company noted that production last quarter averaged 81,977 barrels of oil equivalent per day (BOE/D), which was right near the midpoint of its guidance range of 80,000 to 84,000 BOE/D. That helped push its full-year production average to 70,320 BOE/D, despite some challenging weather in September and October. That's 31% above 2016's average, thanks to a major acquisition earlier in the year.
That said, the company is tapping the brakes in 2018 to keep spending within cash flow, so it doesn't stretch its balance sheet any further. As a result, its capital budget will be between $420 million and $470 million this year, which is roughly $100 million lower than last year at the midpoint. However, that will enable the company to increase output to between 88,000 and 92,000 BOE/D this year, or 28% ahead of last year.
As long as oil prices hold up, Sanchez Energy is on track to increase its output at a fast pace in the next few years, while living within cash flow. However, it's not growing as briskly as some rivals because it has a weaker balance sheet. That's why investors might want to consider some higher-octane growth stocks instead.