Item 8.01 Other Events
Sanchez Energy Corporation (the "Company," "we," "our," "us" or similar terms)
will be relying on the Securities and Exchange Commission's Order under Section
36 of the Securities Exchange Act of 1934 Modifying Exemptions from the
Reporting and Proxy Delivery Requirements for Public Companies dated March 25,
2020 (Release No. 34-88465) to delay the filing of its Annual Report on Form
10-K for the year ended December 31, 2019 (the "Report") due to circumstances
related to coronavirus disease 2019 ("COVID-19"). In particular, COVID-19 and
related federal, state and local restrictions have caused the closure of the
Company's principal offices and limited access to the Company's facilities and
books and records, resulting in limited support from and access to personnel and
professional advisors, as well as communications and similar delays among such
persons, and delays in the receipt and processing of critical information
necessary to complete the Report timely and accurately. In addition, as
previously disclosed, the Company has been in discussions with certain of its
bondholders and other stakeholders regarding a potential restructuring
transaction and other related matters. The outcome of such negotiations, and the
terms of any potential restructuring transaction, remain highly uncertain.
COVID-19 and the economic uncertainty and market turmoil resulting from this
pandemic prior to the conclusion of these discussions have required the devotion
of a significant amount of Company time and resources and administrative support
to simultaneously (i) continue such discussions and related due diligence and
analyses and (ii) complete the Company's financial statements and related
disclosures, while also monitoring how the potential outcome of these ongoing
discussions and any related course of action pursued by the Company may affect
the Report. All of these circumstances have, in turn, delayed the Company from
completing the Report by the original filing deadline. Notwithstanding the
foregoing, the Company expects to file the Report no later than May 14, 2020
(which is 45 days from the Report's original filing deadline of March 30, 2020).
The Company has not yet finalized its financial results for the year ended
December 31, 2019. Among other procedures being carried out to finalize its
books and records, the Company is in the process of completing its impairment
analyses regarding proved and unproved property. The Company's actual results
may differ materially from any estimates due to the completion of its financial
closing procedures, final adjustments and other developments that may arise
between now and the time the financial results for the year ended December 31,
2019 are finalized. The Company currently estimates a material net loss for the
year ended December 31, 2019 as compared to net income of approximately $85.2
million for the year ended December 31, 2018, with the variance primarily
attributable to estimated significant and material proved property impairments
for the year ended December 31, 2019. The adverse impact of lower commodity
prices on proved reserve values, in addition to the Company's recent and
projected reduced drilling and development activities, contributed to the
estimated proved property impairment. In addition, the Company expects to record
a material impairment to its unproved oil and natural gas properties for the
year ended December 31, 2019 as compared to approximately $7.8 million for the
year ended December 31, 2018. The Company's unproved property impairment
expenses for the years ended December 31, 2019 (estimated) and 2018 were
primarily due to anticipated and actual, respectively, acreage expirations from
changes in the Company's development plans. Significant declines in commodity
prices, further changes to the Company's drilling plans or reductions in proved
reserve estimates could result in additional property impairments in the future,
and such additional impairments could also be material. In addition, sales
revenue for oil, natural gas and natural gas liquids are estimated to be
materially less for the year ended December 31, 2019 as compared to December 31,
2018, with the variance primarily attributable to lower production volumes from
reduced drilling and development activities and lower commodity prices for the
year ended December 31, 2019. The Company faces uncertainty regarding the
adequacy of its liquidity and capital resources and has extremely limited, if
any, access to additional financing beyond its current debtor-in-possession
financing. The Company is in the process of performing various analyses as part
of the preparation of the financial statements and currently anticipates that
the financial statements will contain certain disclosures regarding substantial
doubt about the Company's ability to continue as a going concern as of the year
ended December 31, 2019.
In light of the current COVID-19 pandemic, the Company will include a Risk
Factor in the Report substantially similar to the following:
An occurrence of an uncontrollable event such as the COVID-19 pandemic may
negatively affect our operations.
The occurrence of an uncontrollable event such as the coronavirus disease 2019
("COVID-19") pandemic may negatively affect our operations and financial
condition, and as a result, among other things, our development and production
operations may be curtailed, delayed or canceled. Because our current business
focus is on the exploration and production of oil and natural gas in a limited
number of properties and primarily in a single geographic area, we may be more
affected by this pandemic than we would if our business were more diversified. A
pandemic typically results, and has resulted in this instance, in federal, state
and local restrictions, social distancing, travel bans and quarantines, and has
limited access to our facilities, customers, management, support staff and
professional advisors. These factors, in turn, may not only impact our
operations, financial condition and market demand for the oil and natural gas
that we produce but may also affect our overall ability to react timely to
mitigate the impact of this event. Also, the COVID-19 pandemic, together with
the recent significant decline in commodity prices and volatility in the global
financial markets, has negatively impacted our ongoing bankruptcy proceedings
and it may impede our ability to comply with our filing obligations with the
SEC. In most respects, it is too early in the COVID-19 pandemic to be able to
quantify or qualify the longer-term ramifications on our business or bankruptcy
proceedings, our customers and/or our potential investors and other
stakeholders.
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The foregoing statements are based on the Company's current expectations and
assumptions as of the date of this filing and involve a number of risks and
uncertainties which may cause actual results to differ from these preliminary
estimates and statements. The risks include, but are not limited to, unexpected
changes arising during management's ongoing annual review procedures, the
outcome of the Company's chapter 11 cases and negotiations and discussions with
the Company's bondholders and other stakeholders, and the Company's
restructuring plans.
Certain statements contained in this current report, and certain statements
contained in the Report, will include "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical facts,
included in this current report or in the Report that address activities, events
or developments that the Company expects, believes or anticipates will or may
occur in the future are forward-looking statements. These statements relate to
certain assumptions we made based on management's experience, the Company's
perception of historical trends and technical analyses, current conditions,
anticipated future developments and other factors the Company believes to be
appropriate and reasonable. When used in this current report or in the Report,
words such as "will," "potential," "believe," "estimate," "intend," "expect,"
"may," "should," "anticipate," "could," "plan," "predict," "forecast," "budget,"
"guidance," "project," "profile," "model," "strategy," "future" or their
negatives or the statements that include these words or other similar words that
convey the uncertainty of future events or outcomes, are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. Forward-looking statements are not guarantees of
performance. Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control. The events anticipated by
the Company's forward-looking statements may not occur, and, if any of such
events do, the Company may not have correctly anticipated the timing of their
occurrence or the extent of their impact on the Company's actual results.
Accordingly, you should not place any undue reliance on any of the Company's
forward-looking statements. Any forward-looking statement speaks only as of the
date on which such statement is made, and the Company undertake no obligation to
correct or update any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by applicable law.
These cautionary statements qualify all forward-looking statements attributable
to the Company or persons acting on the Company's behalf.
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SANCHEZ ENERGY CORP 
