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SandRidge Energy, Inc. Updates Shareholders on Operations and Reports Financial Results for First Quarter 2014

May 7, 2014

Reported Adjusted Earnings of $0.07 per Diluted Share and Adjusted EBITDA of $230 Million for the First Quarter

OKLAHOMA CITY, May 7, 2014 /PRNewswire/ — SandRidge Energy, Inc. (NYSE: SD) today announced financial and operational results for the quarter ended March 31, 2014. Additionally, presentation slides will be available on the company’s website, www.sandridgeenergy.com, under Investor Relations/Events at 6:30am EDT on May 8.

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    --  Total production of 7.1 MMBoe (79.2 MBoe per day) included 1.3 MMBoe of
        divested Gulf of Mexico production. $276 million capital spend was below
        plan due to temporary weather impacts.
    --  Extreme winter weather temporarily curtailed production and capital
        spend, now offset by a robust April ramp-up in well connections bringing
        45 wells online vs. 71 in the entire first quarter. As a result,
        Mid-Continent production improved to 55 MBoe per day in April vs. Q1
        average of 51 MBoe per day. Due to the ramp-up, annual production
        guidance is reaffirmed.
    --  71 Q1 Mid-Continent wells had an average 30-day IP of 410 Boe per day
        vs. an average 30-day IP of 366 Boe per day for the 2013 well set.
    --  Company record seven wells delivered 30-day IPs over 1,000 Boe per day
        during the quarter.
    --  Success in southern Grant and northern Garfield County, OK expands our
        focus area by 10 townships into northern Garfield County. During the
        first quarter, 11 test wells delivered an average of 406 Boe per day
        (28% above type curve) with 55% oil.
    --  Kansas dual stacked lateral well with 707 Boe per day 30-day IP (44%
        oil) completed for $5.2 million vs. $6 million for two standard wells,
        demonstrating breakthrough multilateral drilling cost upsides.

James Bennett, SandRidge’s Chief Executive Officer and President, commented, “We are well on our way to deliver the early part of our three year growth plan introduced at our March analyst day. Resumed normal weather conditions have us back on track, with recent activity offsetting the temporary extreme weather challenges in our first quarter Mid-Continent operations. We produced 55 MBoe per day in April compared to our first quarter average of 51 MBoe per day, and brought on 45 new wells in April, compared to 71 wells for all of the first quarter. We continue to advance our value initiatives such as the multi-lateral well programs, producing from multiple zones, and expanding our asset base as with the addition of Oklahoma’s northern Garfield County into our focus area. These efforts continue to position SandRidge as the premier operator in the Mid-Continent region.”

Key Financial Results

    --  Adjusted EBITDA, net of Noncontrolling Interest, was $230 million for
        first quarter 2014 compared to $270 million in first quarter 2013.
    --  Pro forma for divestitures and net of Noncontrolling Interest, adjusted
        EBITDA was $177 million in the first quarter of 2014 compared to $112
        million in the first quarter of 2013.
    --  Adjusted operating cash flow of $136 million for first quarter 2014
        compared to $182 million in first quarter 2013. Included in the first
        quarter 2014 results is $70 million of cash paid to unwind hedges
        related to the Gulf of Mexico divestiture.
    --  Adjusted net income of $37.9 million, or $0.07 per diluted share, for
        first quarter 2014 compared to adjusted net income of $2.0 million, or
        $0.00 per diluted share, in first quarter 2013.

Adjusted net income available to common stockholders, adjusted EBITDA, pro forma adjusted EBITDA and adjusted operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under “Non-GAAP Financial Measures”.

Highlights

Operational Highlights

David Lawler, SandRidge’s Chief Operating Officer remarked, “Record winter weather posed a significant challenge to our development teams during the quarter, and decreased the speed of our new well delivery program. Weather related production deferments totaled approximately 300 MBoe for the quarter. Adapting to the situation, we rapidly connected wells in April, and Mid-Continent production averaged 55 MBoe per day in April and back in line with our annual and three-year targets. At the same time, our innovative teams installed a dual stacked lateral Mississippian prototype well in Harper County, Kansas for $2.6 million per lateral, saving $400,000 per lateral. This compares to drilling two separate wells for $3.0 million each, saving $800,000 total. The well targeted the Upper and Lower Mississippian zones. This result demonstrates our commitment to achieving breakthrough performance, and gives the Mississippian play even stronger economics. We also expanded our resource base during the quarter, adding 10 townships in northern Garfield County, Oklahoma to our focus area after an 11 well appraisal program in the area delivered an average 30-day IP of 406 Boe per day. These wells targeted the Upper and Middle Mississippian, and contain 55% oil with an average cost per well of $3.07 million. SandRidge is maintaining its clear leadership position in the play.”

    --  Notable 30-day IP results during the first quarter:
        --  Seven wells over 1,000 Boe per day
        --  71 wells completed in the first quarter averaged 410 Boe per day
    --  Sumner area performance remains strong with four laterals delivering an
        average 30-day IP of 353 Boe per day (67% oil) during the quarter. Six
        rigs are currently operating in the area, five assigned to horizontal
        development and one assigned to produced water disposal.
    --  During the quarter, 34 artificial lift conversions were completed
        including 14 wells to ESP and 20 wells to rod pump. In total, these
        conversions increased oil by 402 barrels of oil per day and 1,461 Boe
        per day (a 38% increase in Boe rate).
    --  First quarter drill and complete costs averaged $3.0 million per well.
    --  Drilled nine Mid-Continent disposal wells during the quarter and exited
        the quarter disposing approximately 960,000 gross barrels of water per
        day.

Financial / Other Highlights

    --  Pro forma Adjusted EBITDA of $177 million, 58% growth year-over-year
    --  Closed sale of Gulf of Mexico business on February 25, 2014
    --  Quarter-end liquidity of $1.9 billion ($1.2 billion of cash) and a 3.0x
        leverage ratio
    --  87% of liquids production and 63% of natural gas production hedged in
        remainder of 2014

Drilling and Operational Activities

Mid-Continent. During the first quarter of 2014, SandRidge drilled 87 horizontal wells: 58 in Oklahoma and 29 in Kansas. SandRidge also drilled nine disposal wells during the quarter. The company averaged 25 horizontal rigs operating in the play: 14 in Oklahoma and 11 in Kansas. Additionally, the company averaged 2.5 rigs drilling disposal wells. The company’s Mid-Continent assets produced 50.6 MBoe per day during the first quarter (38% Oil, 11% NGLs, 51% Natural Gas).

Gulf of Mexico / Gulf Coast. The company’s Gulf of Mexico and Gulf Coast assets produced 1.3 MMBoe during the first quarter of 2014 (51% Oil, 4% NGLs, 45% Natural Gas). The assets produced 23.6 MBoe per day through closing which occurred on February 25, 2014. The company includes the 56 days of production associated with these properties in its reported production for the quarter.

Permian Basin. In the company’s Permian properties, 51 wells were drilled during the first quarter of 2014, all for SandRidge Permian Trust. The company’s Permian Basin assets produced 6.0 MBoe per day during the quarter (87% Oil, 9% NGLs, 4% Natural Gas).

Other Operating Areas. During the first quarter, SandRidge’s legacy West Texas properties produced approximately 6.1 MBoe per day (1% Oil, 99% Natural Gas). Additionally, its legacy Mid-Continent assets produced 1.8 MBoe per day in the quarter (13% Oil, 8% NGLs, 79% Natural Gas).

Royalty Trusts. At March 31, 2014, the company was obligated to drill 14 development wells for SandRidge Mississippian Trust II (“SDR”) and 145 development wells for SandRidge Permian Trust (“PER”). The company expects to complete its drilling obligations for SDR and PER in the third quarter of 2014.

Discussion of First Quarter 2014 Financial Results

Oil and natural gas revenue decreased 15% to $405 million in the first quarter of 2014 from $478 million in the same period of 2013 as a result of a 21% decrease in total production due to the Gulf of Mexico and Permian divestitures that closed in the first quarters of 2014 and 2013, respectively. Improved oil and gas prices received in the first quarter of 2014 partially offset decreased production for the period. Reported prices, which exclude the impact of derivative settlements, were $97.03 per barrel of oil and $4.53 per Mcf of natural gas during the first quarter of 2014 compared to $94.38 per barrel and $3.21 per Mcf in the same period of 2013.

During the first quarter of 2014, production expense decreased to $13.83 per Boe from $14.73 per Boe in the first quarter of 2013 due primarily to the sale of the Gulf of Mexico properties, which had higher production costs inherent with offshore operations. Also contributing to the lower cost per unit was a 4% decrease in per unit production expense in SandRidge’s Mid-Continent operations.

The company incurred an impairment of approximately $165 million in the first quarter of 2014 due to a full cost ceiling limitation resulting from the divestiture of the Gulf of Mexico properties, as the PV-10 associated with these properties exceeded the associated reduction to the full cost pool.

Operational and Financial Statistics


Information regarding the company’s production, pricing, costs and earnings is presented below:






                                                      Three Months
                                                      Ended March
                                                            31,
                                                      -------------

                                                  2014              2013
                                                  ----              ----

    Production

    Oil (MBbl)                                   2,885             3,962

    NGL (MBbl)                                     642               480

    Natural gas
     (MMcf)                                     21,593            27,321

    Oil equivalent
     (MBoe)                                      7,126             8,995

    Daily production
     (MBoed)                                      79.2              99.9

    Average price per
     unit

    Realized oil
     price per barrel
     -as reported               $97.03 $94.38

    Realized impact
     of derivatives
     per barrel                                  (1.17)             3.54
                                                 -----              ----

    Net realized
     price per barrel           $95.86 $97.92
                                ====== ======

    Realized NGL
     price per barrel
     -as reported               $42.97 $34.11

    Realized impact
     of derivatives
     per barrel                      -      -
                                   ---    ---

    Net realized
     price per barrel           $42.97 $34.11
                                ====== ======

    Realized natural
     gas price per
     Mcf -as
     reported                    $4.53  $3.21

    Realized impact
     of derivatives
     per Mcf                                     (0.48)            (0.02)
                                                 -----             -----

    Net realized
     price per Mcf               $4.05  $3.19
                                 =====  =====

    Realized price
     per Boe -as
     reported                   $56.88 $53.14
                                ====== ======

    Net realized
     price per Boe -
     including impact
     of derivatives             $54.95 $54.65
                                ====== ======

    Average cost per
     Boe

    Lease operating             $13.83 $14.73

    Production taxes                              1.10              1.05

    General and
     administrative

                       General and
                       administrative,
                       excluding
                       stock-
                       based
                       compensation     $4.46             $6.63

                       Stock-
                       based
                       compensation               0.95              2.21

                       Total
                       general
                       and
                       administrative   $5.41             $8.84

    General and
     administrative -
     adjusted

                       General and
                       administrative,
                       excluding
                       stock-
                       based
                       compensation
                        (1)             $3.53             $4.62

                       Stock-
                       based
                       compensation
                        (2)                       0.72              1.36

                       Total
                       general
                       and
                       administrative
                       -adjusted        $4.25             $5.98

    Depletion (3)               $16.97 $18.60

    Lease operating
     cost per Boe

    Mid-Continent                $8.81  $9.18

    Offshore                                     26.53             20.99

    Earnings per
     share

    Earnings (loss)
     per share
     applicable to
     common
     stockholders

                      Basic            $(0.29)           $(1.03)

                      Diluted                    (0.29)            (1.03)

    Adjusted net
     income per share
     available to
     common
     stockholders

                      Basic             $0.05            $(0.02)

                      Diluted                     0.07              0.00

    Weighted average
     number of common
     shares
     outstanding (in
     thousands)

                      Basic                    484,798           477,826

                      Diluted (4)              575,949           569,126

     (1)   Excludes
           transaction
           costs,
           severance
           and
           consent
           solicitation
           costs
           totaling
           $6.6
           million
           and $18.0
           million
           for the
           three-
           month
           periods
           ended
           March 31,
           2014 and
           2013,
           respectively.

     (2)   Three-
           month
           periods
           ended
           March 31,
           2014 and
           2013
           exclude
           $1.7
           million
           and $7.6
           million,
           respectively,
           for the
           acceleration
           of
           certain
           stock
           awards.

     (3)   Includes
           accretion
           of asset
           retirement
           obligation.

     (4)   Includes
           shares
           considered
           antidilutive
           for
           calculating
           earnings
           per share
           in
           accordance
           with GAAP
           for
           certain
           periods
           presented.

Capital Expenditures

The table below summarizes the company’s capital expenditures for the three-month period ended March 31, 2014 and 2013:


                                          Three Months
                                          Ended March
                                               31,
                                         -------------

      2014                          2013
      ----                          ----

                                                       (in thousands)

    Drilling and production

                        Mid-Continent         $165,851                  $234,326

                        Permian Basin           42,192                    60,895

                         Gulf of Mexico/
                         Gulf Coast             22,975                    52,077

                         WTO/Tertiary/
                         Other                                       -                 -

                                                                231,018           347,298

    Leasehold and seismic

                        Mid-Continent           26,592                    11,260

                        Permian Basin              116                       360

                         Gulf of Mexico/
                         Gulf Coast                159                       720

                         WTO/Tertiary/
                         Other                   3,255                       868

                                                                 30,122            13,208

    Inventory                                    3,073                    (2,966)

    Total exploration and
     development                               264,213                   357,540
                                               -------                   -------

    Drilling and oil field
     services                                      620                       632

    Midstream                                    5,957                    15,221

    Other - general                              4,984                    15,319
                                                 -----                    ------

    Total capital expenditures,
     excluding acquisitions                    275,774                   388,712
                                               -------                   -------

    Acquisitions                                 2,352                     5,048
                                                 -----                     -----

    Total capital expenditures                $278,126                  $393,760
                                              ========                  ========

Derivative Contracts

The table below sets forth the company’s consolidated oil and natural gas price swaps and collars for the years 2014 and 2015 as of May 2, 2014 and include contracts that have been novated to or the benefits of which have been conveyed to SandRidge sponsored royalty trusts.


                       Quarter Ending
                       --------------

                                 3/31/2014  6/30/2014 9/30/2014 12/31/2014
                                 ---------  --------- --------- ----------

    Oil (MMBbls):

      Swap Volume                     1.36       0.67      0.94       1.11

      Swap                          $95.85    $100.72    $99.44     $98.78

      Three-way Collar
       Volume                         1.96       1.93      2.07       2.07

      Call Price                   $100.00    $100.00   $100.00    $100.00

      Put Price                     $90.21     $90.22    $90.20     $90.20

      Short Put Price               $70.00     $70.00    $70.00     $70.00

    Natural Gas (Bcf):

      Swap Volume                    14.68      13.65     13.80      11.04

      Swap                           $4.23      $4.25     $4.25      $4.31

      Collar Volume                   0.23       0.23      0.24       0.24

      Collar: High                   $7.78      $7.78     $7.78      $7.78

      Collar: Low                    $4.00      $4.00     $4.00      $4.00

                       Year Ending
                       -----------

                                12/31/2014 12/31/2015
                                ---------- ----------

    Oil (MMBbls):

      Swap Volume                     4.08       5.59

      Swap                          $98.28     $92.44

      Three-way Collar
       Volume                         8.03       2.92

      Call Price                   $100.00    $103.13

      Put Price                     $90.21     $90.82

      Short Put Price               $70.00     $73.13

    Natural Gas (Bcf):

      Swap Volume                    53.17      15.40

      Swap                           $4.26      $4.50

      Collar Volume                   0.94       1.01

      Collar: High                   $7.78      $8.55

      Collar: Low                    $4.00      $4.00

Balance Sheet

The company’s capital structure at March 31, 2014 and December 31, 2013 is presented below (in thousands):


                                                 March 31,                    December 31,

                                                             2014                          2013
                                                             ----                          ----

                                              (in thousands)

    Cash and
     cash
     equivalents                  $1,179,644                        $814,663
                                  ==========                        ========

    Current
     maturities
     of long-
     term
     debt                                                    $ -                           $ -

    Long-
     term
     debt
     (net of
     current
     maturities)

                   Senior credit
                   facility                                    -                             -

                  Senior Notes

                    8.75%
                   Senior
                   Notes due
                   2020, net         444,899                         444,736

                    7.5%
                   Senior
                   Notes due
                   2021            1,178,816                       1,178,922

                    8.125%
                   Senior
                   Notes due
                   2022              750,000                         750,000

                    7.5%
                   Senior
                   Notes due
                   2023, net         821,321                         821,249
                                     -------                         -------

                  Total debt       3,195,036                       3,194,907

     Stockholders'
     equity

                   Preferred
                   stock                   8                               8

                  Common stock           485                             483

                   Additional
                   paid-in
                   capital         5,298,301                       5,294,551

                   Treasury
                   stock, at
                   cost               (6,898)                         (8,770)

                   Accumulated
                   deficit        (3,602,358)                     (3,460,462)

                   Total
                   SandRidge
                   Energy,
                   Inc.
                   stockholders'
                   equity          1,689,538                       1,825,810
                                   ---------                       ---------

                   Noncontrolling
                   interest        1,308,001                       1,349,817

    Total
     capitalization               $6,192,575                      $6,370,534
                                  ==========                      ==========

During the first quarter of 2014, the company’s debt, net of cash balances, decreased by approximately $365 million as a result of the Gulf of Mexico divestiture, funding the company’s drilling program and $70 million of cash paid to unwind hedges related to the Gulf transaction. On May 2, 2014, the company had no amount drawn under its $775 million senior credit facility. The company was in compliance with all applicable covenants contained in its debt agreements during the first quarter and through and as of the date of this release.

2014 Operational Guidance: The company is updating its 2014 guidance to adjust for the closing of the Gulf of Mexico divestiture. Production guidance has been increased to reflect actual production realized from the divested Gulf assets during the first quarter. Additionally, final adjustments related to the sale impacted the full year DD&A rate. The company is increasing its projected NGL price realization to account for better NGL realizations experienced in the first quarter.



                                                          Projection as of                 Projection as of

                                                             May 7, 2014                   February 27, 2014

    Production

                        Oil (MMBbls)                12.0                           11.9

                         Natural Gas
                         Liquids
                         (MMBbls)                    3.7                            3.6
                        ------------

                         Total Liquids
                         (MMBbls)                   15.7                           15.5

                         Natural Gas
                         (Bcf)                      83.6                           83.0
                        ------------

                        Total (MMBoe)               29.6                           29.3

    Price Realization

                         Oil
                         (differential
                         below NYMEX
                         WTI)                      $2.50                          $2.50

                         Natural Gas
                         Liquids
                         (realized % of
                         NYMEX WTI)                   35%                            33%

                         Natural Gas
                         (differential
                         below NYMEX
                         Henry Hub)                $1.00                          $1.00

    Costs per Boe

                        Lifting          $11.15 - $13.15                                                $11.15 - $13.15

                         Production
                         Taxes             1.15 - 1.35                                    1.15 - 1.35

                         DD&A -oil &
                         gas              15.30 - 17.30                                  15.60 - 17.60

                        DD&A - other       2.20 - 2.40                                    2.20 - 2.40
                        ------------

                        Total DD&A       $17.50 - $19.70                                                $17.80 - $20.00

                        G&A - cash         3.60 - 4.00                                    3.60 - 4.00

                        G&A - stock        0.65 - 0.80                                    0.65 - 0.80
                        -----------

                        Total G&A          $4.25 - $4.80                                                  $4.25 - $4.80

    EBITDA from Oilfield Services
     and Other ($ in millions)(1)                                           $20                                      $20

    Adjusted Net Income
     Attributable to
     Noncontrolling Interest ($ in
     millions)(2)                                                          $120                                     $120

    Adjusted EBITDA Attributable
     to Noncontrolling Interest ($
     in millions)(3)                                                       $155                                     $155

    Corporate Tax Rate                                                        0%                                       0%

    Deferral Rate                                                             0%                                       0%

    Capital Expenditures ($ in
     millions)

                         Exploration and
                         Production               $1,230                         $1,230

                         Land and
                         Seismic                     120                            120
                        ---------

                         Total
                         Exploration
                         and Production           $1,350                         $1,350

                         Oil Field
                         Services                     15                             15

                         Electrical/
                         Midstream                    60                             60

                         General
                         Corporate                    50                             50
                        ----------

                         Total Capital
                         Expenditures
                         (excluding
                         acquisitions)            $1,475                         $1,475

      (1)   EBITDA from
            Oilfield
            Services
            and Other
            is a non-
            GAAP
            financial
            measure as
            it
            excludes
            from net
            income
            interest
            expense,
            income tax
            expense
            and
            depreciation,
            depletion
            and
            amortization.
            The most
            directly
            comparable
            GAAP
            measure
            for EBITDA
            from
            Oilfield
            Services
            and Other
            is Net
            Income
            from
            Oilfield
            Services
            and Other.
            Information
            to
            reconcile
            this non-
            GAAP
            financial
            measure to
            the most
            directly
            comparable
            GAAP
            financial
            measure is
            not
            available
            at this
            time, as
            management
            is unable
            to
            forecast
            the
            excluded
            items for
            future
            periods
            and/or
            does not
            forecast
            the
            excluded
            items on a
            segment
            basis.

      (2)   Adjusted
            Net Income
            Attributable
            to
            Noncontrolling
            Interest
            is a non-
            GAAP
            financial
            measure as
            it
            excludes
            gain or
            loss due
            to changes
            in fair
            value of
            derivative
            contracts
            and gain
            or loss on
            sale of
            assets.
            The most
            directly
            comparable
            GAAP
            measure
            for
            Adjusted
            Net Income
            Attributable
            to
            Noncontrolling
            Interest
            is Net
            Income
            Attributable
            to
            Noncontrolling
            Interest.
            Information
            to
            reconcile
            this non-
            GAAP
            financial
            measure to
            the most
            directly
            comparable
            GAAP
            financial
            measure is
            not
            available
            at this
            time, as
            management
            is unable
            to
            forecast
            the
            excluded
            items for
            future
            periods.

      (3)   Adjusted
            EBITDA
            Attributable
            to
            Noncontrolling
            Interest
            is a non-
            GAAP
            financial
            measure as
            it
            excludes
            from net
            income
            interest
            expense,
            income tax
            expense,
            depreciation,
            depletion
            and
            amortization,
            gain or
            loss due
            to changes
            in fair
            value of
            derivative
            contracts
            and gain
            or loss on
            sale of
            assets.
            The most
            directly
            comparable
            GAAP
            measure
            for
            Adjusted
            EBITDA
            Attributable
            to
            Noncontrolling
            Interest
            is Net
            Income
            Attributable
            to
            Noncontrolling
            Interest.
            Information
            to
            reconcile
            this non-
            GAAP
            financial
            measure to
            the most
            directly
            comparable
            GAAP
            financial
            measure is
            not
            available
            at this
            time, as
            management
            is unable
            to
            forecast
            the
            excluded
            items for
            future
            periods.

Non-GAAP Financial Measures

Adjusted operating cash flow, adjusted EBITDA, pro forma adjusted EBITDA, adjusted net income and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.

The company defines adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities and adjusted for cash (paid) received on financing derivatives. It defines EBITDA as net loss before income tax expense, interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding asset impairment, interest income, loss on derivative contracts net of cash (paid) received on settlement of derivative contracts,(gain) loss on sale of assets, transaction costs, legal settlements, consent solicitation costs, severance, loss on extinguishment of debt and other various non-cash items (including non-cash portion of noncontrolling interest and stock-based compensation). Pro forma adjusted EBITDA, as presented herein, is adjusted EBITDA excluding adjusted EBITDA attributable to properties or subsidiaries sold during the period.

Adjusted operating cash flow and adjusted EBITDA are supplemental financial measures used by the company’s management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the company’s ability to internally fund exploration and development activities and to service or incur additional debt. The company also uses these measures because adjusted operating cash flow and adjusted EBITDA relate to the timing of cash receipts and disbursements that the company may not control and may not relate to the period in which the operating activities occurred. Further, adjusted operating cash flow and adjusted EBITDA allow the company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. These measures should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles (“GAAP”). Adjusted EBITDA should not be considered as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Therefore, the company’s adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Management also uses the supplemental financial measure of adjusted net income, which excludes tax expense resulting from divestiture/acquisition, asset impairment, loss on derivative contracts net of cash (paid) received on settlement of derivative contracts, (gain) loss on sale of assets, transaction costs, legal settlements, consent solicitation costs, loss on extinguishment of debt, severance and other non-cash items from loss applicable to common stockholders. Management uses this financial measure as an indicator of the company’s operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net income is not a measure of financial performance under GAAP and should not be considered a substitute for loss applicable to common stockholders.

The supplemental measure of adjusted net income attributable to noncontrolling interest is used by the company’s management to measure the impact on the company’s financial results of the ownership by third parties of interests in the company’s less than wholly-owned consolidated subsidiaries. Adjusted net income attributable to noncontrolling interest excludes the portion of asset impairment, loss on derivative contracts net of cash (paid) received on settlement of derivative contracts, legal settlement and loss on sale of assets attributable to third party ownership in less than wholly-owned consolidated subsidiaries from net loss attributable to noncontrolling interest. Adjusted net income attributable to noncontrolling interest is not a measure of financial performance under GAAP and should not be considered a substitute for net income attributable to noncontrolling interest.

The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net income available to common stockholders and adjusted net income attributable to noncontrolling interest.

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Operating Cash Flow


                            Three Months
                             Ended March
                                  31,
                            -------------

        2014                 2013
        ----                 ----

                                                 (in thousands)

    Net cash provided by
     operating activities            $90,451                        $121,457

    (Deduct) add

      Cash (paid)
       received on
       financing
       derivatives        (44,128)                          3,208

      Changes in
       operating
       assets and
       liabilities         89,468                          56,921
                           ------                          ------

    Adjusted operating cash
     flow                           $135,791                        $181,586
                                    ========                        ========

Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA



                                                  Three Months Ended
                                                      March 31,
                                                 ------------------

                                                   2014           2013
                                                   ----           ----

                                                   (in thousands)

    Net loss                                  $(128,015)     $(479,340)

    Adjusted for

      Income tax
       expense                        127         4,429

      Interest expense
       (1)                         62,323        88,834

      Depreciation and
       amortization -
       other                       15,522        15,336

      Depreciation and
       depletion -oil
       and natural gas            115,185       157,526

      Accretion of
       asset
       retirement
       obligations                  5,746         9,779
                                    -----         -----

    EBITDA                                       70,888       (203,436)

      Asset impairment            164,779               -

      Interest income                (280)         (529)

      Stock-based
       compensation                 4,585        11,312

      Loss on
       derivative
       contracts                   42,491        40,897

      Cash (paid)
       received upon
       settlement of
       derivative
       contracts (2)              (13,730)       13,498

      Other non-cash
       income                        (791)       (2,503)

      (Gain) loss on
       sale of assets
       (3)                            (19)      398,174

      Transaction
       costs                           27           624

      Legal
       settlements                        -                     1,178

      Consent
       solicitation
       costs                          139        13,463

      Severance                     8,109        10,397

      Loss on
       extinguishment
       of debt                            -                    82,005

      Non-cash
       portion of
       noncontrolling
       interest (4)               (45,804)      (95,227)

    Adjusted EBITDA                            $230,394       $269,853
                                               ========       ========

    Pro forma adjustments

      Less EBITDA
       attributable to

                            Permian
                            properties
                            sold
                             (2013)                   -        (50,574)

                            Gulf of
                            Mexico
                            properties
                            sold
                             (2014)             (53,376)      (107,025)

    Pro forma adjusted EBITDA                  $177,018       $112,254
                                               ========       ========

     (1)   Excludes
           unrealized
           gains on
           interest
           rate swaps
           of $2.4
           million
           for the
           three-
           month
           period
           ended
           March 31,
           2013.

     (2)   Excludes
           amounts
           paid upon
           early
           settlement
           of
           derivative
           contracts.

     (3)   Includes
           loss on
           the
           Permian
           divestiture
           of
           approximately
           $399.1
           million
           for the
           three-
           month
           period
           ended
           March 31,
           2013.

     (4)   Represents
           depreciation
           and
           depletion,
           impairment,
           loss on
           sale of
           Permian
           Properties
           (2013),
           loss on
           commodity
           derivative
           contracts
           net of
           cash
           (paid)
           received
           on
           settlement,
           legal
           settlement
           and income
           tax
           expense
           attributable
           to
           noncontrolling
           interests.

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA



                                                     Three Months
                                                     Ended March
                                                           31,
                                                     -------------

                                                   2014          2013
                                                   ----          ----

                                                   (in thousands)

    Net cash provided by
     operating activities                       $90,451      $121,457

    Changes in operating assets
     and liabilities                             89,468        56,921

    Interest expense (1)                         62,323        88,834

    Cash paid on early
     settlement of derivative
     contracts (2)                               25,434        29,623

    Transaction costs                                27           624

    Legal settlements       -            1,178

    Consent solicitation costs                      139        13,463

    Severance                                     6,422         2,781

    Noncontrolling interest -
     SDT (2)                                     (6,537)      (11,303)

    Noncontrolling interest -
     SDR (2)                                    (12,951)      (16,927)

    Noncontrolling interest -
     PER (2)                                    (20,242)      (15,100)

    Noncontrolling interest -
     Other (2)                                       (4)           22

    Other non-cash items                         (4,136)       (1,720)
                                                 ------        ------

    Adjusted EBITDA                            $230,394      $269,853
                                               ========      ========

     (1)   Excludes
           unrealized
           gains on
           interest
           rate swaps
           of $2.4
           million
           for the
           three-
           month
           period
           ended
           March 31,
           2013.

     (2)   Excludes
           approximately
           $44.1
           million
           paid on
           early
           settlement
           of
           financing
           derivative
           contracts
           for 2014
           period.

     (3)   Excludes
           depreciation
           and
           depletion,
           impairment,
           loss on
           sale of
           Permian
           Properties
           (2013),
           loss on
           commodity
           derivative
           contracts
           net of
           cash
           (paid)
           received
           on
           settlement,
           legal
           settlement
           and income
           tax
           expense
           attributable
           to
           noncontrolling
           interests.

Reconciliation of Loss Applicable to Common Stockholders to Adjusted Net Income Available to Common Stockholders



                                                       Three Months Ended
                                                           March 31,
                                                      ------------------

                                                        2014           2013
                                                        ----           ----

                                                         (in thousands,
                                                        except per share
                                                             data)

    Loss applicable to common
     stockholders                                  $(141,896)     $(493,221)

    Tax expense resulting from
     divestiture/acquisition              -  4,359

    Asset impairment(1)                              134,906              -

    Loss on derivative
     contracts(1)                                     36,485         34,222

    Cash (paid) received upon
     settlement of derivative
     contracts (1)                                   (12,802)        11,506

    (Gain) loss on sale of
     assets (1)                                          (19)       326,434

    Transaction costs                                     27            624

    Legal settlements (1)                 -    778

    Consent solicitation costs                           139         13,463

    Severance                                          8,109         10,397

    Loss on extinguishment of
     debt                                 - 82,005

    Other non-cash income                             (1,131)        (2,480)

    Effect of income taxes                               157             63
                                                         ---            ---

    Adjusted net income
     available to common
     stockholders                                     23,975        (11,850)

    Preferred stock dividends                         13,881         13,881
                                                      ------         ------

    Total adjusted net income                        $37,856         $2,031
                                                     =======         ======

    Weighted average number of
     common shares outstanding

                               Basic                 484,798        477,826

                               Diluted (2)           575,949        569,126

    Total adjusted net income

                                Per share -
                                basic                  $0.05         $(0.02)

                                Per share -
                                diluted                $0.07          $0.00

     (1)   Excludes
           amounts
           attributable
           to
           noncontrolling
           interests.

     (2)   Weighted
           average
           fully
           diluted
           common
           shares
           outstanding
           for
           certain
           periods
           presented
           includes
           shares
           that are
           considered
           antidilutive
           for
           calculating
           earnings
           per share
           in
           accordance
           with GAAP.

Reconciliation of Net Loss Attributable to Noncontrolling Interest to Adjusted Net Income Attributable to Noncontrolling Interest


                                                         Three Months
                                                          Ended March
                                                               31,
                                                         -------------

                                                       2014          2013
                                                       ----          ----

                                                        (in thousands)

    Net loss attributable to
     noncontrolling interest                        $(6,070)     $(51,919)

    Asset impairment                                 29,873             -

    Loss on sale of assets -
     Permian                               - 71,740

    Legal settlement                       -    400

    Loss on derivative
     contracts                                        6,006         6,675

    Cash (paid) received on
     settlement of derivative
     contracts                                         (928)        1,992

                              Adjusted
                              net income
                              attributable
                              to
                              noncontrolling
                              interest              $28,881       $28,888

Conference Call Information

The company will host a conference call to discuss these results on Thursday, May 8, 2014 at 8:00 am CDT. The telephone number to access the conference call from within the U.S. is 866-318-8611 and from outside the U.S. is 617-399-5130. The passcode for the call is 90945049. An audio replay of the call will be available from May 8, 2014 until 11:59 pm CDT on June 7, 2014. The number to access the conference call replay from within the U.S. is 888-286-8010 and from outside the U.S. is 617-801-6888. The passcode for the replay is 40691055.

A live audio webcast of the conference call will also be available via SandRidge’s website, www.sandridgeenergy.com, under Investor Relations/Events. The webcast will be archived for replay on the company’s website for 30 days.

Conference Participation

SandRidge Energy, Inc. will participate in the following upcoming events:

    --  May 13, 2014 - Barclays HY Energy Conference; Phoenix, AZ
    --  June 3, 2014 - RBC Energy Conference; NYC, NY

At 8:00 am Central Time on the day of each presentation, the corresponding slides and any webcast information will be accessible on the Investor Relations portion of the company’s website at www.sandridgeenergy.com. Please check the website for updates regularly as this schedule is subject to change. Also, please note that SandRidge Energy, Inc. intends for its website to be used as a reliable source of information for all future events in which it may participate as well as updated presentations regarding the company. Slides and webcasts (where applicable) will be archived and available for at least 30 days after each use or presentation.

Second Quarter 2014 Earnings Release and Conference Call

August 6, 2014 (Wednesday) – Earnings press release after market close

August 7, 2014 (Thursday) – Earnings conference call at 8:00 am CDT


                             SandRidge Energy, Inc. and Subsidiaries

                              Consolidated Statements of Operations

                              (in thousands, except per share data)

                                                                                     Three Months Ended
                                                                                         March 31,
                                                                                   ------------------

                                                                                       2014          2013
                                                                                       ----          ----

                                                                                       (Unaudited)

    Revenues

      Oil, natural gas
       and NGL                                     $405,316              $478,017

      Drilling and
       services                                      17,080                17,370

      Midstream and
       marketing                                     17,910                13,032

      Other                                           2,750                 3,271
                                                      -----                 -----

                                               Total
                                               revenues         443,056             511,690

    Expenses

      Production                                     98,535               132,501

      Production taxes                                7,807                 9,439

      Cost of sales                                  12,481                16,317

      Midstream and
       marketing                                     16,000                11,803

      Depreciation and
       depletion -oil
       and natural gas                              115,185               157,526

      Depreciation and
       amortization -
       other                                         15,522                15,336

      Accretion of
       asset
       retirement
       obligations                                    5,746                 9,779

      Impairment                                    164,779                                -

      General and
       administrative                                38,538                79,444

      Loss on
       derivative
       contracts                                     42,491                40,897

      (Gain) loss on
       sale of assets                                   (19)              398,174
                                                        ---               -------

                                               Total
                                               expenses         517,065             871,216
                                              ---------

                                               Loss from
                                               operations       (74,009)           (359,526)
                                              ---------

    Other income (expense)

      Interest expense                              (62,043)             (85,910)

      Loss on
       extinguishment
       of debt                                                                -                 (82,005)

      Other income,
       net                                            2,094                   611

                                               Total
                                               other
                                               expense          (59,949)           (167,304)
                                              --------

    Loss before income
     taxes                                                                         (133,958)    (526,830)

    Income tax expense                                                                  127         4,429
                                                                                        ---         -----

    Net loss                                                                       (134,085)    (531,259)

      Less: net loss
       attributable to
       noncontrolling
       interest                                      (6,070)             (51,919)
                                                     ------               -------

    Net loss
     attributable to
     SandRidge Energy,
     Inc.                                                                          (128,015)    (479,340)

    Preferred stock
     dividends                                                                       13,881        13,881
                                                                                     ------        ------

                                               Loss
                                               applicable
                                               to
                                               SandRidge
                                               Energy,
                                               Inc.

                                               common
                                               stockholders   $(141,896)          $(493,221)
                                              =========

    Loss per share

      Basic                                                      $(0.29)             $(1.03)
                                                                 ======              ======

      Diluted                                                    $(0.29)             $(1.03)
                                                                 ======              ======

    Weighted average number of common shares
     outstanding

      Basic                                                     484,798             477,826
                                                                =======             =======

      Diluted                                                   484,798             477,826
                                                                =======             =======


                                      SandRidge Energy, Inc. and Subsidiaries

                                            Consolidated Balance Sheets

                                       (in thousands, except per share data)

                                                        March 31,             December 31,

                                                                      2014                      2013
                                                                      ----                      ----

                                                       (Unaudited)

                    ASSETS

     Current
     assets

    Cash
     and
     cash
     equivalents                                                $1,179,644                  $814,663

     Accounts
     receivable,
     net                                                           293,765                   349,218

     Derivative
     contracts                                                       9,002                    12,779

    Costs
     in
     excess
     of
     billings
     and
     contract
     loss                                                            4,144                     4,079

     Prepaid
     expenses                                                       13,567                    39,253

    Other
     current
     assets                                                         25,823                    21,831
                                                                    ------                    ------

         Total
         current
         assets              1,525,945                           1,241,823

    Oil and natural gas properties,
     using full cost method of
     accounting

      Proved                10,443,534                          10,972,816

      Unproved                 292,459                             531,606

      Less:
       accumulated
       depreciation,
       depletion and
       impairment          (6,043,109)                          (5,762,969)
                            ----------                          ----------

                                                                 4,692,884                 5,741,453
                                                                 ---------                 ---------

    Other
     property,
     plant
     and
     equipment,
     net                                                           559,342                   566,222

     Derivative
     contracts                                                      18,048                    14,126

    Other
     assets                                                         82,038                   121,171
                                                                    ------                   -------

         Total
         assets             $6,878,257                          $7,684,795
                            ==========                          ==========

                           LIABILITIES AND EQUITY

     Current
     liabilities

     Accounts
     payable
     and
     accrued
     expenses                                                     $581,764                  $812,488

     Derivative
     contracts                                                      14,175                    34,267

    Asset
     retirement
     obligations                                                         -                    87,063

    Other
     current
     liabilities                                                    16,467                         -

         Total
         current
         liabilities           612,406                             933,818

    Long-
     term
     debt                                                        3,195,036                 3,194,907

     Derivative
     contracts                                                           -                    20,564

    Asset
     retirement
     obligations                                                    53,103                   337,054

    Other
     long-
     term
     obligations                                                    20,173                    22,825
                                                                    ------                    ------

         Total
         liabilities         3,880,718                           4,509,168
                             ---------                           ---------

     Commitments
     and
     contingencies

    Equity

     SandRidge
     Energy,
     Inc.
     stockholders'
     equity

    Preferred stock, $0.001 par
     value, 50,000 shares authorized

         8.5%
       Convertible
       perpetual
       preferred
       stock; 2,650
       shares issued
       and
       outstanding at
       March 31,

      2014 and
       December 31,
       2013; aggregate
       liquidation
       preference of
       $265,000                      3                                   3

         6.0%
       Convertible
       perpetual
       preferred
       stock; 2,000
       shares issued
       and
       outstanding at
       March 31,

      2014 and
       December 31,
       2013; aggregate
       liquidation
       preference of
       $200,000                      2                                   2

         7.0%
       Convertible
       perpetual
       preferred
       stock; 3,000
       shares issued
       and
       outstanding at
       March 31,

      2014 and
       December 31,
       2013; aggregate
       liquidation
       preference of
       $300,000                      3                                   3

    Common stock, $0.001 par value,
     800,000 shares authorized;
     495,719 issued and 494,651
     outstanding at March 31, 2014
     and 491,609 issued and 490,290
     outstanding at December 31, 2013

                      485          483

     Additional
     paid-
     in
     capital                                                     5,302,051                 5,298,301

     Additional
     paid-
     in
     capital
     -
     stockholder
     receivable                                                     (3,750)                   (3,750)

     Treasury
     stock,
     at
     cost                                                           (6,898)                   (8,770)

     Accumulated
     deficit                                                    (3,602,358)               (3,460,462)
                                                                ----------                ----------

        Total SandRidge
         Energy, Inc.
         stockholders'
         equity              1,689,538                           1,825,810

     Noncontrolling
     interest                                                    1,308,001                 1,349,817
                                                                 ---------                 ---------

         Total
         equity              2,997,539                           3,175,627

         Total
         liabilities
         and
         equity             $6,878,257                          $7,684,795
                            ==========                          ==========


             SandRidge Energy, Inc. and Subsidiaries

              Consolidated Statements of Cash Flows

                          (in thousands)

                                                  Three Months Ended
                                                      March 31,
                                                 -------------------

                                                       2014             2013
                                                       ----             ----

                                                     (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES

      Net loss                                    $(134,085)       $(531,259)

       Adjustments
       to
       reconcile
       net
       loss
       to net
       cash
       provided
       by
       operating
       activities

         Depreciation,
         depletion
         and
         amortization                               130,707          172,862

        Accretion of
         asset
         retirement
         obligations                                  5,746            9,779

        Impairment                                  164,779                -

        Debt
         issuance
         costs
         amortization                                 2,361            3,008

        Amortization
         of discount,
         net of
         premium, on
         long-term
         debt                                           129              672

        Loss on
         extinguishment
         of debt                                          -           82,005

        Deferred
         income tax
         provision                                        -            4,359

        Loss on
         derivative
         contracts                                   42,491           40,897

        Cash paid on
         settlement
         of
         derivative
         contracts                                  (39,164)         (21,684)

        (Gain) loss
         on sale of
         assets                                         (19)         398,174

        Stock-based
         compensation                                 6,786           19,850

        Other                                           188             (285)

        Changes in
         operating
         assets and
         liabilities                                (89,468)         (56,921)

            Net cash
             provided by
             operating
             activities                              90,451          121,457
                                                     ------          -------

    CASH FLOWS FROM INVESTING ACTIVITIES

      Capital
       expenditures
       for
       property,
       plant and
       equipment                                   (331,016)        (421,876)

      Acquisitions
       of assets                                     (2,352)          (5,048)

      Proceeds
       from sale
       of assets                                    707,366        2,559,374

            Net cash
             provided by
             investing
             activities                             373,998        2,132,450
                                                    -------        ---------

    CASH FLOWS FROM FINANCING ACTIVITIES

      Repayments
       of
       borrowings                                         -       (1,115,500)

      Premium on
       debt
       redemption                                         -          (61,997)

      Debt
       issuance
       costs                                              -              (91)

      Proceeds
       from the
       sale of
       royalty
       trust units                                   22,119                -

       Noncontrolling
       interest
       distributions                                (53,118)         (51,256)

      Acquisition
       of
       ownership
       interest                                      (2,730)               -

      Stock-based
       compensation
       excess tax
       benefit                                            2                -

      Purchase of
       treasury
       stock                                         (4,350)         (12,041)

      Dividends
       paid -
       preferred                                    (17,263)         (17,263)

      Cash (paid)
       received on
       settlement
       of
       financing
       derivative
       contracts                                    (44,128)           3,208

            Net cash used in
             financing
             activities                             (99,468)      (1,254,940)
                                                    -------        ---------

    NET INCREASE IN
     CASH AND CASH
     EQUIVALENTS                                    364,981          998,967

    CASH AND CASH
     EQUIVALENTS,
     beginning of
     year                                           814,663          309,766

    CASH AND CASH
     EQUIVALENTS,
     end of year                                 $1,179,644       $1,308,733
                                                 ==========       ==========

    Supplemental Disclosure of Cash Flow
     Information

      Cash paid
       for
       interest,
       net of
       amounts
       capitalized                                  $92,896        $(127,181)

      Cash
       received
       for income
       taxes                                              -              476

    Supplemental Disclosure of Noncash
     Investing and Financing Activities

      Deposit on
       pending
       sale                               $               -        $(255,000)

      Change in
       accrued
       capital
       expenditures                                 $55,242          $33,164

      Asset
       retirement
       costs
       capitalized                                     $818           $1,102

For further information, please contact:

Duane M. Grubert

EVP – Investor Relations and Strategy

SandRidge Energy, Inc.

123 Robert S. Kerr Avenue

Oklahoma City, OK 73102-6406

(405) 429-5515

Cautionary Note to Investors – This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, the information appearing under the heading “Operational Guidance.” These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include projections and estimates of net income and EBITDA, drilling plans, oil and natural gas production, derivative transactions, pricing differentials, operating costs, general and administrative costs, capital spending, tax rates, and descriptions of our development plans and appraisal programs. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to natural gas wells, the availability and terms of capital, the ability of counterparties to transactions with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in Part I, Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2013. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements.

SandRidge Energy, Inc. is an oil and natural gas company headquartered in Oklahoma City, Oklahoma with its principal focus on exploration and production. SandRidge and its subsidiaries also own and operate gas gathering and processing facilities and conduct marketing operations. In addition, Lariat Services, Inc., a wholly-owned subsidiary of SandRidge, owns and operates a drilling rig and related oil field services business. SandRidge focuses its exploration and production activities in the Mid-Continent region of the United States. SandRidge’s internet address is www.sandridgeenergy.com.

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SOURCE SandRidge Energy, Inc.


Source: PR Newswire



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