Texas energy company criticized for ties to family’s businesses

Shares of Sanchez Energy Corp., a Houston-based holding company that the Sanchez family took public in 2011, have risen 50% this year, and the company’s oil and gas production has increased from 600 barrels per day two years ago to about 16,500 currently,

the

Wall Street Journal

reported.

But the company, which owns lucrative properties in the Eagle Ford Shale, “still operates much like a family-run firm,” the

Journal

article said.

Among the risks: Chairman Tony Sanchez Jr. and his son Chief Executive Tony Sanchez III are employed by a private company that manages operations for the public company and other private family businesses. Sanchez Energy acquired assets from entities run by members of the Sanchez family. And the public company’s charger, as the company discloses in its regulatory filings, allows executives and family-controlled companies to compete with it.

Sanchez Oil & Gas Corp., a closely held private management company, provides services to Sanchez Energy and three family-run companies, the article said.

Tony Sanchez Jr., co-founder, chairman and CEO of Sanchez Oil and Gas, was the Democratic Party’s nominee governor of Texas in 2002; he lost to Rick Perry, the

Journal

report noted.

In August, Sanchez Energy acquired drilling rights in Mississippi from Sanchez Resources LLC for about $2,500 an acre, much higher than nearby land acquired by another company a month earlier, the

Journal

article said. (Source:

Wall Street Journal,

Nov. 11, 2013.)