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Sanchez Energy: Why Its Current Share Price Assumes An Average Of $70+ WTI Oil In 2015

I had made a comment about Sanchez Energy (SN) was pricing in $75 WTI oil and $4 natural gas in its current share price. There were some questions about how that could be the case, so I've decided to do a detailed look at Sanchez Energy's forward EBITDA for 2015 compared to how it looked at the end of Q2 2014. At the end of Q2 2014, its share price was near all-time highs and it looked likely to generate $758 million EBITDA for the forward year. With an enterprise value of $3.719 billion at the time, its EV to forward EBITDA ratio was 4.9x. Sanchez Energy's current enterprise value is approximately $2.3 billion. Therefore, with a similar 4.9x multiple, Sanchez Energy should be doing approximately $469 million in forward year EBITDA (including the effect of hedges) at its current share price. My more detailed look indicates this would be… Read More …