A 90% plus share price implosion, all but sums up Sanchez Energy Corporation (OTCMKTS:SNEC) underperformance over the past year. The stock is currently languishing at all-time lows and in dire need of groundbreaking catalysts to bounce back. The New York Stock Exchange delisting the stock has all but exacerbated the company’s woes in the exploration and drilling sector.
Share Price Analysis
Delisting from the NYSE follows a plunge of the share price below the $1 a share level. Its market cap has also shrunk below the required $50 million level. The stock has since struggled to bounce back as investors continue to question the company’s long-term prospects
Amidst the delisting debacle, Sanchez Energy has sought to reaffirm its growth metrics. The company is in the process of drilling nine new horizontal wells in Eagle Ford Shale in Texas as it looks to reinvigorate its prospects in the energy sector.
However, It will take more than the drilling news for the stock to bounce back from the $0.20 level. With soaring short selling pressure, Sanchez Energy remains susceptible to further drops in continuation of the long-term downtrend.
Any bounce back from current lows looks set to experience strong resistance at the $0.50 level, above which the stock would turn bullish be it in the short term. For the stock to become bullish, as a long-term play, it needs to surge and stabilize above the $2 a share level.
About Sanchez Energy
Sanchez Energy casts itself as an independent exploration and production company. The company specializes in the acquisition and development of U.S onshore conventional oil and natural gas resources.
NYSE Delisting Woes
Sanchez has taken a significant hit in the market on being hit with a delisting notice by the New York Stock Exchange. A plunge in share price, as well as market cap all but, dealt the stock’s sentiments a big blow in the market. However, the company appears to be making efforts to regain listing in the popular exchange.
“In accordance with applicable NYSE procedures, the company plans to timely notify the NYSE that it intends to present a plan to meet the minimum market capitalization requirement. The NYSE provides for a period of 45 days from receipt of the notice to submit a plan advising the NYSE of definitive actions the company has taken, or is taking,” Sanchez Energy In a statement.
Sanchez has sought to put the delisting debacle behind its back, as it looks to revitalize its growth prospects after a rollercoaster 2018. The company has thus set sights on strengthening its prospects by embarking on a drilling drive at the Eagle Ford Shale of South Texas.
The company is currently working on drilling nine new horizontal wells having already filed applications with the Railroad Commission. Sanchez Energy is targeting the Briscoe Ranch field where it hopes to drill up to 8,400 feet in nine separate horizontal drilling prospects.
Even as the company embarks on a drilling spree, it faces an uncertain future. While the company was among the most prolific drillers in the Eagle Ford Shale last year, it is yet to report any profits from its operations since 2017. Last year alone the company filed applications for up to 188 drilling permits and went on to produce 6.4 million barrels of crude oil. It also produced 181.9 billion cubic feet of natural gas.
In addition to failing to generate any profits, the company faces large interest payments and obligations to stockholders that continue to bombard its sentiments in the market. The company has since engaged the services of bankruptcy advisory firm Moelis & Co to act as a financial adviser.
Uncertainties over the company’s ability to continue operating as a going concern has seen it receive negative ratings in the market. For instance, the stock commands an average recommendation of a ‘hold’ from twelve equity research firms. One equity firm has hit the stock with a ‘sell’ rating. The average share price rating from the firms currently stands at $2.34 a share as the stock continues to languish below the $1 a share level.
While the company is yet to report its full-year financial results for FY2018, estimates indicate the company is on course to report a year-over-year decline in earnings on higher revenues.
Sanchez Resources finds itself in a precarious position even on moving to strengthen its pipeline of assets with the drilling of nine new wells. Delisting from the NYSE is a big blow that should continue to affect the stock’s sentiments in the market.
For the stock to bounce back, then the company will have to deliver impressive financial results in addition to other groundbreaking catalysts. Until then taking a back a seat would be an ideal play as the stock remains under immense short selling pressure.
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Disclosure: We have no position in SNEC and have not been compensated for this article.