Sanchez Energy’s (NYSE: SN) market cap fortunes have fallen by nearly 70% since June 1, when oil began its tumble toward $50 per barrel (bbl).

On Jan. 7, the Eagle Ford intensive company again revised down its capital budget for 2015 to $600-$650 million, a drop of 45% from its original capex this year of $1.15 billion. Overall, the company’s budget is basically a repeat of 2014 spending.

Sanchez’ budget reflects continuing deep cuts to 2015 spending across the E&P sector. In December, North American budgets were down about 14%, but the spending decline could fall to as much as 30% if WTI prices don’t bounce back from $50 prices, said Dave Anderson, analyst, Barclays, in a Jan. 9 conference call.

On Jan. 8, for instance, Halcón Resources (NYSE: HK) continued to cull its budget, saying it would bring its drilling and completion budget to $375-$425 million. The revision is a 60% decrease from HK’s 2014 capex of $1 billion and a deeper cut than its earlier capex estimate of $775 million.

Sanchez said about $560-$600 million will be spent on drilling and completion and as much as $50 million on midstream and other expenses.

Activity, primarily in the Eagle Ford, will be reduced from 8 gross (7 net) rigs to 3.5 rigs (3 net), a decrease of about 60% from fourth-quarter 2014 levels. Part of a well will also be drilled in the Tuscaloosa Marine Shale.

“SN is making a dramatic cut to total spending,” said Brian Gamble, analyst, Simmons & Co. International. “Even though SN discussed carryover capital spending of $150 MM for completion of wells drilled in 2014, we still believe total capex could fall lower if current oil prices of $51/bbl persist for any significant period of time.”

At Simmons’ current price deck of $51/bbl and $3 per million btu (MMbtu), SN’s outspend will reach $300 million based on capex estimates of $550 million. However, Sanchez assumes a flat price deck of $60/bbl for oil and $3.75 per MMbtu for natural gas. Sanchez does not think it will have to tap its bank credit facility, which has a $650 million borrowing base with an elected commitment of $300 million.

Tony Sanchez III, president and CEO of Sanchez Energy, said the new capital plan reduced another 30% from the $875 million capital revisions the company announced in early November.

The revised budget will put three of its rigs at Catarina and one rig at Palmetto, said Patrick Rigamer, analyst, Global Hunter Securities.

As a result, 2015 production is expected to average between 40,000-44,000 barrels of oil equivalent per day (boe/d), allowing SN to maintain expected fourth-quarter 2014 average daily production and increase 2015 production year over year by about 40%.

Sanchez said the company has asked all service vendors to reduce prices according to the changing commodity-price environment.

“Material reductions have been made and are ongoing in all operating cost segments,” he said. “At Catarina, we expect a decrease in overall well costs with total drilling and completion costs averaging $5 million per well by mid-January.”

Simmons pointed out that the reduction would drop Catarina costs from the $7.5 million SN paid in the third quarter of 2014.

The 33% drop may be optimistic, with Baird Energy predicting drilling and completion reductions of 10%, said Ethan Bellamy, senior analyst.

“Time will tell is SN can execute upon this strategy,” he said.

At Halcón, production guidance was lowered to 40-45 Mboe/d, reducing growth to 4% from 17%.

The company is significantly hedged throughout 2015 and into 2016.

Floyd C. Wilson, chairman and CEO, said the company’s plan is to put money into where EURs and initial production rates are highest.

“We are comfortable with our current liquidity position and we expect our strong hedge portfolio to continue generating income well into 2016,” Wilson said. “Although we are significantly hedged, the continued weakness in crude oil prices, combined with elevated service costs, calls for conservative planning. We expect to see these costs come down dramatically during 2015."

E&Ps Recalibrate Spending In 2015

Ticker

2014 Capex ($MM)

2015 Capex ($MM)

2015 Capex Change

2015 Production Change

Guidance Issued

Abraxas Petroleum Corp.

AXAS

$190

$54

-72%

26%

December

Anadarko Petroleum

APC

9563

8100

-15%

5%

December

Apache Corp.

APA

10,500

6660

-37%

0%

December

Approach Resources

AREX

400

180

-55%

12%

December

Bill Barrett Corp.

BBG

565

513

-9%

-18%

December

Cabot Oil & Gas

COG

1415

1542

9%

21%

December

Callon Petroleum

CPE

215

175

-19%

35%

Carrizo Oil & Gas

CRZO

700

450

-36%

23%

Chesapeake Energy

CHK

6243

5841

-6%

0%

December

Concho Resources

CXO

2,600

3,000

15%

30%

November

ConocoPhillips

COP

16,875

13,500

-20%

5%

Continental Resources

CLR

4.59B

2.7B

-40%

18%

December

Denbury Resources

DNR

1,100

550

-50%

0%

November

Devon Energy

DVN

6900

6000

-13%

1%

December

Emerald Oil

EOX

250

72

-71%

30%

Encana Corp.

ECA

2,550

2,800

10%

-9%

Energy XXI

EXXI

875

680

-22%

N/A

November

EOG Resources

EOG

8404

7720

-8%

13%

December

EQT Corp

EQT

2,400

2,500

4%

26%

Gastar Exploration

GST

224

173

-23%

49.5%

November

Goodrich Petroleum Corp

GDP

350

175

-50%

-2%

Halcón Resources Corp

HK

1,025

400

-61%

4%

January

Kosmos Energy

KOS

575

705

23%

18%

December

Laredo Petroleum

LPI

1000

525

-48%

12%

December

Magnum Hunter Resources

MHR*

537

225

-58%

N/A

December

Marathon Oil

MRO

5190

4700

-9%

25%

December

MEG Energy

MEG

1320

1373

4%

3%

December

Newfield Exploration

NFX

2130

1560

-27%

4%

December

Noble Energy

NBL

4885

4165

-15%

18%

December

Oasis Petroleum

OAS

1,096

800

-27%

6%

December

Occidental Petroleum

OXY

9054

8000

-12%

9%

December

PDC Energy

PDCE

648

557

-14%

42%

December

Pioneer Natural Resources

PXD

3400

3300

-3%

14%

December

QEP Resources

QEP

1759

1653

-6%

-6%

December

Range Resources

RRC

1,585

1,300

-18%

25%

December

Rex Energy

REXX

412

200

-43%

33%

December

Rosetta Resources

ROSE

1,200

750

-38%

20%

December

Southwestern Energy

SWN

2,400

2,600

8%

31%

December

Sanchez Energy

SN

625

625

0%

40%

January

Swift Energy Corp.

SFY

395

250

-37%

-1%

November

Talisman Energy

TLM

3000

1875

-38%

8%

December

Ultra Petroleum

UPL

1495

689

-54%

18%

December

WPX Energy

WPX

1735

1530

-12%

-11%

December

Source: Global Hunter Securities, Topeka Capital Markets, Barclays, Simmons & Co., company press releases, Hart Energy (OilandGasInvestor.com). *Based on analyst/management discussion.