bannerimages

Press Release Details

SandRidge Energy, Inc. Reports Financial and Operational Results for Fourth Quarter and Full Year 2018

03/04/2019

OKLAHOMA CITY, March 4, 2019 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE:SD) today announced financial and operational results for the quarter and fiscal year ended December 31, 2018.

SandRidge Energy, Inc. logo. (PRNewsFoto/SandRidge Energy, Inc.)

Highlights During and Subsequent to Fourth Quarter and Full Year 2018

  • Appointed Paul McKinney as President & CEO in January 2019
  • Fourth quarter net income of $54 million, or $1.53 per share (including $43 million of gains on derivatives), and adjusted net income of $5 million, or $0.15 per share (excluding non-cash impact of hedges and other items)
  • Year end 2018 net loss of $9 million, or $0.26 per share (including $17 million of loss on derivatives), and adjusted net income of $20 million, or $0.57 per share (excluding non-cash impact of hedges and other items)
  • Adjusted EBITDA of $45 million for the fourth quarter and $167 million for year end 2018
  • Beat midpoint of 2018 production guidance while achieving cash costs and capital expenditures that were 3% and 8% below midpoint of guidance, respectively
  • North Park production increased 53% year over year, reaching 30% of total Company oil production in 2018
  • Standardized Measure and PV-10 of $1.0 billion ($612 million using alternative pricing of $54/Bbl and $2.75/MMBtu)

"This is a great time to be joining SandRidge Energy," said Paul McKinney, President and CEO. "With a clean balance sheet, a talented team of oil and gas professionals, and the support of our Board of Directors, we are focusing on profitably growing shareholder value. We have developed a business strategy founded on the principles and industry best practices that we believe will deliver a competitive rate of return to our shareholders on a sustainable basis. Considering the commodity price volatility our industry is experiencing, we plan to maintain flexibility in our capital spending plans with the intention of staying within or very close to within our cash flow. This strategy also supports our ability to capture accretive opportunities we encounter in the market place.

"Our business strategy is focused on a few key components we believe will drive success as we acquire, explore for and develop hydrocarbon resources in the United States. To win in this industry you need to have a winning team and we will do whatever is necessary to attract and retain top tier talent. We will pursue operational excellence with a sense of urgency to deliver low-cost and efficient execution of our operations, leveraging advanced technologies and data analytics to develop a culture of continuous improvement while holding to our core values prioritizing health, safety and environmental stewardship. We will allocate our resources to projects that deliver high margins and returns while fully accounting for risk and uncertainty in each investment opportunity, optimize our portfolio by upgrading our assets through accretive acquisitions, mergers and dispositions that reduce our break-even costs, and explore all avenues of cost reduction. Finally, we will continue to exercise financial discipline by protecting our balance sheet through responsible use of leverage and hedging and financial strategies that sustain our capital programs, and ultimately deliver free cash flow with competitive debt-adjusted per share returns."

Financial Results

Fourth Quarter

For the fourth quarter, the Company reported net income of $54 million, or $1.53 per share, and net cash provided by operating activities of $36 million. After adjusting for certain items, the Company's adjusted net income amounted to $5 million, or $0.15 per share, operating cash flow totaled $44 million and adjusted EBITDA was $45 million for the quarter. The Company defines and reconciles adjusted net income, adjusted EBITDA and other non-GAAP financial measures to the most directly comparable GAAP measure in supporting tables at the conclusion of this press release beginning on page 15.

Full Year

For the full year of 2018, the Company reported a net loss of $9 million, or $0.26 per share, and net cash provided by operating activities of $146 million. After adjusting for certain items, the Company's adjusted net income amounted to $20 million, or $0.57 per share, operating cash flow totaled $137 million and adjusted EBITDA was $167 million for the year.

Operational Results and Activity

Production totaled 3.1 MMBoe (27% oil, 24% NGLs and 49% natural gas) for the fourth quarter and 12.3 MMBoe (28% oil, 23% NGLs and 49% natural gas) for the full year of 2018. During the quarter, the Company averaged two rigs in the Mid-Continent region targeting the Mississippian and the Northwest STACK Meramec and one rig in North Park Basin targeting the Niobrara.

North Park Basin Asset in Jackson County, Colorado

Fourth Quarter

Net oil production in the North Park Basin totaled 314 MBo (3.4 MBopd) for the fourth quarter. During the quarter, the Company drilled six wells.

Full Year 2018

In 2018, the Company drilled twelve North Park Basin wells and brought nine wells to sales. One rig drilled two spacing tests, a federal unit obligation well and initiated southern delineation. Production from the eight well eastern spacing test exceeded type curve expectation by a cumulative 14% on an average per well basis and confirmed a minimum of twelve wells per section spacing in this area. The Company also drilled a six well western spacing test using a twenty-three wells per section pattern. The six wells are currently being tested with results expected early in the second quarter 2019. With seven months of drilling, the Company increased oil production in the field by 53% year over year.

Efforts to expand gas processing capabilities progressed throughout the year. The mechanical refrigeration unit "MRU" went into service during the first quarter 2019. The MRU is currently processing 2,000 Mcf per day to extract natural gas liquids and reduce emissions within the field. Construction of a gas to liquids "GTL" processing facility is ongoing with initial installation expected in the second quarter 2019. The GTL pilot is projected to convert 500 Mcf per day into 50 Bbls of diesel and naphtha, with no residual gas.

Mid-Continent Assets in Oklahoma and Kansas

Fourth Quarter

In the fourth quarter, production in the Mississippian totaled 2.5 MMBoe (27 MBoepd, 17% oil) and Northwest STACK production totaled 183 MBoe (2 MBoepd, 40% oil). The Company averaged two rigs in the Mid-Continent and drilled seven wells, two in the Mississippian and five in the Northwest STACK.

The five wells drilled in the Northwest STACK targeted the Meramec, with three wells drilled under the previously announced Drilling Participation Agreement. During the quarter, the Company brought three wells to sales in the Northwest STACK with a 30-Day IP per well average of 292 Boepd (67% oil).

During the quarter, the Company drilled the remaining two wells of the Mississippian four well program and brought three wells online.

Full Year 2018

During the year, the Company drilled twenty-two wells in the Mid-Continent with an average of two rigs and brought twenty wells to sales. In the Northwest STACK, eighteen Meramec wells were drilled with fifteen wells under the Drilling Participation Agreement. Under this agreement, the Company spent only $6 million in total drilling and completion capital for 2018. As a result, the Company converted 5,800 acres to 'held by production,' delineated the play and optimized geologic targeting and completions techniques. In the Mississippian, the Company drilled and completed a four well program which produced a 30-Day IP per well average of 399 Boepd (58% oil).

Year End 2018 Estimated Proved Reserves

The Company's total estimated SEC proved reserves as of December 31, 2018 were 160 MMBoe, a decrease of 10% year over year. The Company's Standardized Measure and PV-10 was $1.0 billion, an increase of 40% year over year. SEC pricing used in the preparation of the December 31, 2018 reserves was $65.56 per Bbl for oil and $3.10 per MMBtu for natural gas, before adjustments.

For comparative purposes, utilizing alternative pricing of $54.00 per Bbl of oil and $2.75 per MMBtu for natural gas rather than SEC pricing for oil and natural gas, total reserves at December 31, 2018 were 128 MMBoe, with a PV-10 of $612 million. These calculations were based on the SEC proved reserves estimation methodology, but applied the aforementioned alternative prices. 

Proved reserves decreased from 177.6 MMBoe at December 31, 2017 to 160.2 MMBoe at December 31, 2018, primarily as a result of incorporating a one-time adjustment to estimated future workover costs in the Mississippian Lime where a larger population of these wells are transitioning into late-life mature production. This estimate of future costs contributed to a 24.9 MMBoe decrease associated with shorter economic lives and when combined with a decrease of 8.3 MMBoe attributable to well performance, results in total revisions of 33.2 MMBoe (7% oil). Proved reserves also decreased 6.6 MMBoe due to divestitures. These reductions were partially offset by the acquisition of 15.4 MMBoe associated with the purchase of interest in Mid-Continent wells, extensions and discoveries of 19.3 MMBoe from successful drilling, as well as recording proved undeveloped reserves at an increased well density in the North Park Basin.


Oil MBbls


NGLs MBbls


Gas MMcf


Equivalent MBoe1


Standardized
Measure /PV-10
$MM

Proved Reserves, December 31, 2017

61,791


34,314


488,932


177,594


$

749

Extensions & Discoveries

11,148


2,320


35,185


19,332



Purchases

2,146


4,131


54,436


15,350



Sales of Assets

(5,273)


(809)


(2,969)


(6,577)



Production

(3,477)


(2,829)


(36,175)


(12,335)



Revisions

(2,316)


(8,952)


(131,518)


(33,188)



Proved Reserves, December 31, 2018

64,019


28,175


407,891


160,176


$

1,046


1) Equivalent Boe are calculated using an energy equivalent ratio of six Mcf of natural gas to one Bbl of oil. Using an energy-equivalent ratio does not factor in price differences and energy-equivalent prices may differ significantly among produced products.

SEC Proved Reserves and Alternative Price Based Proved Reserves



YE 2018 @ SEC Pricing1


YE 2018 @ Alternative Pricing2












Equivalent MBoe


Standardized
measure / PV-10
$MM


Equivalent
MBoe


PV-10 $MM

Developed


92,302


$

659


82,659


$

479

Undeveloped


67,874


$

387


44,847


$

133

Total Proved


160,176


$

1,046


127,506


$

612


1) SEC Pricing remains flat for reserve life at $65.56/Bo & $3.10/MMBtu

2) Alternative pricing of $54.00/Bo & $2.75/MMBtu

20 19 Capital Expenditures and Operational Guidance

In 2019, the Company plans to spend $160 - $180 million in total capital expenditures, which includes $115 - $125 million in drilling and completion capital allocated between the North Park Basin and Mid-Continent. Total production for 2019 is projected to be 11.4 - 12.0 MMBoe with oil production over 32%. Other operational guidance detail can be found on the "2019 Operational and Capital Expenditure Guidance" table below.

Liquidity and Capital Structure

As of February 20, 2019, the Company had no debt and total liquidity was $356 million, which includes $11 million of cash and $345 million of borrowing base under the credit facility, net of outstanding letters of credit. 

Conference Call Information

The Company will host a conference call to discuss these results on Tuesday, March 5, 2019 at 8:00 am CT. The telephone number to access the conference call from within the U.S. is (833) 245-9650 and from outside the U.S. is (647) 689-4222. The passcode for the call is 3764669. An audio replay of the call will be available from March 5, 2019 until 11:59 pm CT on April 4, 2019. The number to access the conference call replay from within the U.S. is (800) 585-8367 and from outside the U.S. is (416) 621-4642. The passcode for the replay is 3764669.

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

2019 Operational and Capital Expenditure Guidance
Presented below is the Company's operational and capital expenditure guidance for 2019. 





Guidance



Projection as of



March 4, 2019


Production



  Oil (MMBbls)

3.7 - 3.9


  Natural Gas Liquids (MMBbls)

2.5 - 2.6


Total Liquids (MMBbls)

6.2 - 6.5


  Natural Gas (Bcf)

31.0 - 33.0


Total (MMBoe)

11.4 - 12.0





Price Differentials to NYMEX



  Oil (per Bbl)

($4.30)


  Natural Gas Liquids (realized % of NYMEX WTI)

37%


  Natural Gas (per MMBtu)

($1.30)





Expenses



  LOE

$89 - $94 million


  Adjusted G&A Expense (1)

$34 - $37 million





% of Revenue



  Severance and Ad Valorem Taxes

6.5% - 7.0%








Capital Expenditures ($ in millions)




   Drilling and Completion

$115 - $125


   Other Exploration and Production

$45 - $55


Total Capital Expenditures

$160 - $180


(excluding acquisitions and plugging and abandonment)




1. Adjusted G&A expense is a non-GAAP financial measure. The Company has defined this measure at the conclusion of this press release under "Non-GAAP Financial Measures" beginning on page 15. 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.

2018 Actual Results vs. 2018 Guidance  

Presented below is the Company's 2018 operational and capital expenditure actuals vs. the midpoint of 2018 guidance.








FY 2018 Actuals


FY 2018 Guidance
(Midpoint)


Delta

Production






  Oil (MMBbls)

3.5


3.5


0

  Natural Gas Liquids (MMBbls)

2.8


2.8


0

Total Liquids (MMBbls)

6.3


6.3


0

  Natural Gas (Bcf)

36.2


35.7


0.5

Total (MMBoe)

12.3


12.2


0.1







Expenses






  LOE ($ in millions)

$93


$94


$(1)

  Adjusted G&A Expense (1) ($ in millions)

$37


$40


$(3)



















Capital Expenditures ($ in millions)

Drilling and Completion






  Mid-Continent

$27


$24


$3

  North Park Basin

55


58


(3)

  Other (2)

33


35


(2)

Total Drilling and Completion

$115


$117


$(2)







Other E&P






  Land, G&G, and Seismic

$11


$16


$(5)

  Infrastructure (3)

15


18


(3)

  Workover

25


26


(1)

  Capitalized G&A and Interest

5


7


(2)

Total Other Exploration and Production

$56


$67


$(11)







  General Corporate

0


1


(1)

Total Capital Expenditures

$171


$185


$(14)

(excluding acquisitions and plugging and abandonment)







1. Adjusted G&A expense is a non-GAAP financial measure. The Company has defined this measure at the conclusion of this press release under "Non-GAAP Financial Measures" beginning on page 15. 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.

2. Primarily 2017 Carryover

3. Includes Production Gathering and Facilities

Operational and Financial Statistics  

Information regarding the Company's production, pricing, costs and earnings is presented below:


Three Months Ended December 31,


Year Ended December 31,


2018


2017


2018


2017

Production - Total








Oil (MBbl)

840


1,027


3,477


4,157

NGL (MBbl)

719


775


2,829


3,376

Natural Gas (MMcf)

8,954


10,354


36,175


44,237

Oil equivalent (MBoe)

3,051


3,528


12,335


14,906

Daily production (MBoed)

33.2


38.3


33.8


40.8









Average price per unit








Realized oil price per barrel - as reported

$

57.20


$

53.31


$

61.73


$

48.72

Realized impact of derivatives per barrel

(4.22)


(2.54)


(10.38)


1.03

Net realized price per barrel

$

52.98


$

50.77


$

51.35


$

49.75









Realized NGL price per barrel - as reported

$

20.86


$

23.69


$

23.72


$

18.16

Realized impact of derivatives per barrel




Net realized price per barrel

$

20.86


$

23.69


$

23.72


$

18.16









Realized natural gas price per Mcf - as reported

$

2.44


$

1.92


$

1.85


$

2.09

Realized impact of derivatives per Mcf

(0.22)


0.21


0.04


0.06

Net realized price per Mcf

$

2.22


$

2.13


$

1.89


$

2.15









Realized price per Boe - as reported

$

27.84


$

26.35


$

28.27


$

23.90

Net realized price per Boe - including impact of derivatives

$

26.03


$

26.23


$

25.47


$

24.38









Average cost per Boe








Lease operating

$

7.79


$

7.29


$

7.52


$

6.89

Production taxes

$

1.56


$

1.19


$

1.58


$

0.92

Depletion (1)

$

11.55


$

8.66


$

10.32


$

7.92









Earnings per share








Earnings (loss) per share applicable to common stockholders








Basic

$

1.53


$

(0.54)


$

(0.26)


$

1.45

Diluted

$

1.53


$

(0.54)


$

(0.26)


$

1.44









Adjusted net income (loss) per share available to common stockholders








Basic

$

0.15


$

0.34


$

0.57


$

1.62

Diluted

$

0.15


$

0.34


$

0.57


$

1.61









Weighted average number of shares outstanding (in thousands)








Basic

35,312


34,494


35,057


32,442

Diluted (2)

35.312


34,547


35,057


32,663


(1) Includes accretion of asset retirement obligation.

(2) Includes shares considered antidilutive for calculating loss per share in accordance with GAAP.

Capital Expenditures  

The table below presents actual results of the Company's capital expenditures for the three and twelve months ended December 31, 2018 at the same level of detail as the 2018 full year capital expenditure guidance.


Three Months Ended


Twelve Months Ended


December 31, 2018


December 31, 2018


(In thousands)


(In thousands)





Drilling and Completion




  Mid-Continent

$

15,934


$

27,025

  North Park Basin

17,896


54,737

  Other (1)

3,448


33,349

Total Drilling and Completion

$

37,278


$

115,111





Other E&P




  Land, G&G, and Seismic

$

1,402


$

11,147

  Infrastructure (2)

7,450


14,649

  Workovers

6,192


24,508

  Capitalized G&A and Interest

838


5,379

Total Other Exploration and Production

$

15,882


$

55,683





  General Corporate

$

347


$

392





Total Capital Expenditures

$

53,507


$

171,186

(excluding acquisitions and plugging and abandonment)





(1) Primarily 2017 Carryover

(2) Production Gathering and Facilities

Derivative Contracts

In December 2018, the Company entered into early settlements of all open crude oil swaps covering 9 MBbls per day of production in December 2018 at an average strike price of $56.12 and 5 MBbls per day of production in 2019 at an average strike price of $54.29. The table below sets forth the Company's hedge position for 2019 as of March 4, 2019:



Quarter Ending
















3/31/2019


6/30/2019


9/30/2019


12/31/2019


FY 2019

Natural Gas Swaps:











Total Volume (Bcf)


4.50





4.50

Daily Volume (MMBtupd)


50.0





50.0

Swap Price ($/MMBtu)


$4.28





$4.28












Capitalization

The Company's capital structure as of December 31, 2018 and December 31, 2017 is presented below:


December 31, 2018


December 31, 2017






(In thousands)





Cash, cash equivalents and restricted cash

$

19,645


$

101,308





Credit facility

$


$

Building note


37,502

Total debt


37,502





Stockholders' equity




Common stock

36


36

Warrants

88,516


88,500

Additional paid-in capital

1,055,164


1,038,324

Accumulated deficit

(295,995)


(286,920)

Total SandRidge Energy, Inc. stockholders' equity

847,721


839,940





Total capitalization

$

847,721


$

877,442

 

SandRidge Energy, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)



Successor



Predecessor


Year Ended December 31, 2018


Year Ended December 31, 2017


Period from
October 2, 2016
through
December 31,
2016



Period from
January 1, 2016
through
October 1, 2016

Revenues









Oil, natural gas and NGL

$

348,726


$

356,210


$

98,307



$

279,971

Other

669


1,089


149



13,838

 Total revenues

349,395


357,299


98,456



293,809

Expenses









Production

92,703


102,728


24,997



129,608

Production taxes

19,470


13,644


2,643



6,107

Depreciation and depletion—oil and natural gas

127,281


118,035


36,061



90,978

Depreciation and amortization—other

11,982


13,852


3,922



21,323

Impairment

4,170


4,019


319,087



718,194

General and administrative

41,666


76,024


9,837



116,091

Accelerated vesting of employment compensation

6,545





Proxy contest

7,139





Terminated merger costs


8,162




Employee termination benefits

32,657


4,815


12,334



18,356

Loss (gain) on derivative contracts

17,155


(24,090)


25,652



4,823

Loss on settlement of contract





90,184

Other operating (income) expense

(998)


479


268



4,348

 Total expenses

359,770


317,668


434,801



1,200,012

 (Loss) income from operations

(10,375)


39,631


(336,345)



(906,203)

Other (expense) income









Interest expense, net

(2,787)


(3,868)


(372)



(126,099)

Gain on extinguishment of debt

1,151





41,179

Gain on reorganization items, net





2,430,599

Other income, net

2,865


2,550


2,744



1,332

 Total other income (expense)

1,229


(1,318)


2,372



2,347,011

(Loss) income before income taxes

(9,146)


38,313


(333,973)



1,440,808

Income tax (benefit) expense

(71)


(8,749)


9



11

Net (loss) income

(9,075)


47,062


(333,982)



1,440,797

Preferred stock dividends





16,321

(Loss applicable) income available to SandRidge Energy, Inc. common stockholders

$

(9,075)


$

47,062


$

(333,982)



$

1,424,476

(Loss) earnings per share









Basic

$

(0.26)


$

1.45


$

(17.61)



$

2.01

Diluted

$

(0.26)


$

1.44


$

(17.61)



$

2.01

Weighted average number of common shares outstanding









Basic

35,057


32,442


18,967



708,928

Diluted

35,057


32,663


18,967



708,928

 

SandRidge Energy, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)



December 31, 2018


December 31, 2017

ASSETS




Current assets




Cash and cash equivalents

$

17,660


$

99,143

Restricted cash - other

1,985


2,165

Accounts receivable, net

45,503


71,277

Derivative contracts

5,286


1,310

Prepaid expenses

2,628


5,248

Other current assets

265


15,954

 Total current assets

73,327


195,097

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




Proved

1,269,091


1,056,806

Unproved

60,152


100,884

Less: accumulated depreciation, depletion and impairment

(580,132)


(460,431)


749,111


697,259

Other property, plant and equipment, net

200,838


225,981

Other assets

1,062


1,290

 Total assets

$

1,024,338


$

1,119,627





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable and accrued expenses

$

111,797


$

139,155

Derivative contracts


10,627

Asset retirement obligation

25,393


41,017

Other current liabilities


8,115

 Total current liabilities

137,190


198,914

Long-term debt


37,502

Derivative contracts


3,568

Asset retirement obligation

34,671


36,527

Other long-term obligations

4,756


3,176

 Total liabilities

176,617


279,687

Stockholders' Equity




Common stock, $0.001 par value; 250,000 shares authorized; 35,687 issued and outstanding at December 31, 2018 and 35,650 issued and outstanding at December 31, 2017

36


36

Warrants

88,516


88,500

Additional paid-in capital

1,055,164


1,038,324

Accumulated deficit

(295,995)


(286,920)

 Total stockholders' equity

847,721


839,940

 Total liabilities and stockholders' equity

$

1,024,338


$

1,119,627

 

SandRidge Energy, Inc. and Subsidiaries

Consolidated Cash Flows

(In thousands)



Successor



Predecessor


Year Ended December 31, 2018


Year Ended December 31, 2017


Period from
October 2, 2016
through
December 31,
2016



Period from
January 1, 2016
through October
1, 2016

CASH FLOWS FROM OPERATING ACTIVITIES









Net (loss) income

$

(9,075)


$

47,062


$

(333,982)



$

1,440,797

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities









 Provision for doubtful accounts

(462)


406


(13,166)



16,704

 Depreciation, depletion, and amortization

139,263


131,887


39,983



112,301

 Impairment

4,170


4,019


319,087



718,194

 Gain on reorganization items, net





(2,442,436)

 Debt issuance costs amortization

470


430




4,996

 Amortization of premiums and discounts on debt

(47)


(330)


(81)



2,734

 Gain on extinguishment of debt

(1,151)





(41,179)

 Gain on debt derivatives





(1,324)

 Cash paid for early conversion of convertible notes





(33,452)

 Loss (gain) on derivative contracts

17,155


(24,090)


25,652



4,823

 Cash (paid) received on settlement of derivative contracts

(35,325)


7,260


7,698



72,608

 Loss on settlement of contract





90,184

 Cash paid on settlement of contract





(11,000)

 Stock-based compensation

23,377


15,750


6,250



9,075

 Other

(1,571)


344


717



(3,260)

 Changes in operating assets and liabilities increasing (decreasing) cash









Deconsolidation of noncontrolling interest





(9,654)

Receivables

16,560


115


12,872



36,116

Prepaid expenses

2,620


127


(1,079)



(5,681)

Other current assets

170


191


(260)



(181)

Other assets and liabilities, net

(1,754)


4,186


1,505



(7,542)

Accounts payable and accrued expenses

(4,257)


(2,199)


990



(3,595)

Asset retirement obligations

(4,629)


(3,979)


(591)



(61,305)

Net cash provided by (used in) operating activities

145,514


181,179


65,595



(112,077)

CASH FLOWS FROM INVESTING ACTIVITIES









 Capital expenditures for property, plant and equipment

(187,047)


(219,246)


(51,676)



(186,452)

 Acquisition of assets

(24,764)


(48,312)




(1,328)

 Proceeds from sale of assets

28,358


21,834


11,841



20,090

Net cash used in investing activities

(183,453)


(245,724)


(39,835)



(167,690)

CASH FLOWS FROM FINANCING ACTIVITIES









 Proceeds from borrowings

10,000





489,198

 Repayments of borrowings

(46,304)



(414,954)



(74,243)

 Debt issuance costs


(1,488)




(333)

 Proceeds from building mortgage





26,847

 Payment of mortgage proceeds and cash recovery to debt holders





(33,874)

 Cash paid for tax withholdings on vested stock awards

(7,420)


(6,730)


(110)



(44)

 Other



3



Net cash (used in) provided by  financing activities

(43,724)


(8,218)


(415,061)



407,551

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS and RESTRICTED CASH

(81,663)


(72,763)


(389,301)



127,784

CASH, CASH EQUIVALENTS and RESTRICTED CASH, beginning of year

101,308


174,071


563,372



435,588

CASH, CASH EQUIVALENTS and RESTRICTED CASH, end of period

$

19,645


$

101,308


$

174,071



$

563,372

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in this press release, including reconciliations to their most directly comparable GAAP measure.

Reconciliation of Cash Provided by Operating Activities to Operating Cash Flow

The Company defines operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities as shown in the following table. Operating cash flow is a supplemental financial measure 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 this measure because operating cash flow relates 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, operating cash flow allows the Company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. This measure should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with GAAP.


Three Months Ended December 31,


Year Ended December 31,


2018


2017


2018


2017










(In thousands)

Net cash provided by operating activities

$

36,346


$

33,273


$

145,514


$

181,179

Changes in operating assets and liabilities

7,697


7,258


(8,710)


1,559

Operating cash flow

$

44,043


$

40,531


$

136,804


$

182,738

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

The Company defines EBITDA as net income (loss) before income tax benefit, interest expense, depreciation and amortization - other and depreciation and depletion - oil and natural gas. Adjusted EBITDA, as presented herein, is EBITDA excluding items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are non-recurring, as shown in the following tables.

Adjusted EBITDA is presented because management believes it provides useful additional information used by the Company's management and by securities analysts, investors, lenders, ratings agencies and others who follow the industry for analysis of the Company's financial and operating performance on a recurring basis and the Company's ability to internally fund exploration and development and to service or incur additional debt. In addition, management believes that adjusted EBITDA is widely used by professional research analysts and others in the valuation, comparison and investment recommendations of companies in the oil and gas exploration and production industry. The Company's adjusted EBITDA may not be comparable to similarly titled measures used by other companies.


Three Months Ended December 31,


Year Ended December 31,


2018


2017


2018


2017










(In thousands)

Net income (loss)

$

54,178


$

(18,760)


$

(9,075)


$

47,062









Adjusted for








Income tax expense (benefit)

1


(253)


(71)


(8,749)

Interest expense

640


1,377


3,148


4,886

Depreciation and amortization - other

2,753


3,123


11,982


13,852

Depreciation and depletion - oil and natural gas

35,233


30,549


127,281


118,035

EBITDA

92,805


16,036


133,265


175,086









Asset impairment


544


4,170


4,019

Stock-based compensation

962


3,134


10,246


13,923

(Gain) loss on derivative contracts

(42,608)


21,934


17,155


(24,090)

Cash (paid) received upon settlement of derivative contracts

(6,300)


(440)


(35,325)


7,260

Employee termination benefits

4



32,657


4,815

Proxy contest



7,139


Acceleration of performance units



1,232


Restructuring costs




3,739

Drilling participation agreement transaction costs


20



2,901

Terminated merger costs


8,162



8,162

Gain on extinguishment of debt



(1,151)


Other

(212)


(181)


(2,669)


(3,026)









Adjusted EBITDA

$

44,651


$

49,209


$

166,719


$

192,789

Reconciliation of Cash Provided by Operating Activities to Adjusted EBITDA


Three Months Ended December 31,


Year Ended December 31,


2018


2017


2018


2017










(In thousands)

Net cash provided by operating activities

$

36,346


$

33,273


$

145,514


$

181,179









Changes in operating assets and liabilities

7,697


7,258


(8,710)


1,559

Interest expense

640


1,377


3,148


4,886

Employee termination benefits (1)

4



19,526


2,990

Proxy contest



7,139


Acceleration of performance units



1,232


Restructuring costs




3,739

Drilling participation agreement transaction costs


20



2,901

Income tax expense (benefit)

1


(253)


(71)


(8,749)

Terminated merger costs


8,162



8,162

Other

(37)


(628)


(1,059)


(3,878)









Adjusted EBITDA

$

44,651


$

49,209


$

166,719


$

192,789


1. Excludes associated stock-based compensation.

Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Net Income Available to Common Stockholders

The Company defines adjusted net income as net income excluding items that the Company believes affect the comparability of operating results and are typically excluded from published estimates by the investment community, including items whose timing and/or amount cannot be reasonably estimated or are non-recurring, as shown in the following tables.

Management uses the supplemental measure of adjusted net income 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 net income available to common stockholders.


Three Months Ended December 31, 2018


Three Months Ended December 31, 2017


$


$/Diluted Share


$


$/Diluted Share










(In thousands, except per share amounts)

Net income (loss) available to common stockholders

$

54,178


$

1.53


$

(18,760)


$

(0.54)









Asset impairment



544


0.02

(Gain) loss on derivative contracts

(42,608)


(1.21)


21,934


0.62

Cash paid upon settlement of derivative contracts

(6,300)


(0.17)


(440)


(0.01)

Employee termination benefits

4




Drilling participation agreement transaction costs



20


Terminated merger costs



8,162


0.24

Other

(131)



246


0.01









Adjusted net income available to common stockholders

$

5,143


$

0.15


$

11,706


$

0.34










Basic


Diluted (1)


Basic


Diluted (1)

Weighted average number of common shares outstanding

35,312


35,312


34,494


34,547









Total adjusted net income per share

$

0.15


$

0.15


$

0.34


$

0.34



Year Ended December 31, 2018


Year Ended December 31, 2017


$


$/Diluted Share


$


$/Diluted Share










(In thousands, except per share amounts)

Net (loss) income available to common stockholders

$

(9,075)


$

(0.26)


$

47,062


$

1.44









Asset impairment

4,170


0.12


4,019


0.12

Loss (gain) on derivative contracts

17,155


0.49


(24,090)


(0.73)

Cash (paid) received upon settlement of derivative contracts

(35,325)


(1.01)


7,260


0.22

Employee termination benefits

32,657


0.93


4,815


0.15

Proxy contest

7,139


0.20



Accelerated vesting of employment compensation

6,545


0.19



Restructuring costs



3,739


0.11

Drilling participation agreement transaction costs



2,901


0.09

Terminated merger costs



8,162


0.25

Gain on extinguishment of debt

(1,151)


(0.03)



Other

(2,208)


(0.06)


(1,396)


(0.04)









Adjusted net income available to common stockholders

$

19,907


$

0.57


$

52,472


$

1.61










Basic


Diluted (1)


Basic


Diluted (1)

Weighted average number of common shares outstanding

35,057


35,057


32,442


32,663









Total adjusted net income per share

$

0.57


$

0.57


$

1.62


$

1.61


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

Reconciliation of PV-10 to Standardized Measure

PV-10 is a non-GAAP financial measure and represents the present value of estimated future cash inflows from proved oil, natural gas and NGL reserves, less future development and production costs, discounted at 10% per annum to reflect timing of future cash flows and using 12-month average prices for the years ended December 31, 2018 and 2017. PV-10 differs from Standardized Measure because it does not include the effects of income taxes on future net revenues. PV-10 is used by the industry and by management as a reserve asset value measure to compare against past reserve bases and the reserve bases of other business entities. It is useful because its calculation is not dependent on the taxpaying status of the entity. Because of the present value of future income tax discounted at 10% is insignificant, these measures are equivalent.

PV-10 utilizing alternative pricing of $54.00 per Bbl of oil and $2.75 per MMBtu for natural gas is a non-GAAP financial measure. It differs from Standardized Measure and is useful to investors because it reflects the potential value of proved reserves based on commodity price assumptions more closely representative of current average NYMEX futures prices rather than SEC pricing and does not include the effects of income taxes on future net revenues. Neither the PV-10 of the Company's SEC reserves, the PV-10 utilizing alternative pricing nor the Standardized Measure represents an estimate of fair market value of the Company's oil and natural gas properties.

Reconciliation of G&A to Adjusted G&A

The Company reports and provides guidance on Adjusted G&A per Boe because it believes this measure is commonly used by management, analysts and investors as an indicator of cost management and operating efficiency on a comparable basis from period to period and to compare and make investment recommendations of companies in the oil and gas industry. This non-GAAP measure allows for the analysis of general and administrative spend without regard to stock-based compensation programs and other non-recurring cash items which can vary significantly between companies. Adjusted G&A per Boe is not a measure of financial performance under GAAP and should not be considered a substitute for general and administrative expense per Boe. Therefore, the Company's Adjusted G&A per Boe may not be comparable to other companies' similarly titled measures.

The Company defines adjusted G&A as general and administrative expense adjusted for certain non-cash stock-based compensation and other non-recurring items as shown in the following tables.


Three Months Ended December 31, 2018


Three Months Ended December 31, 2017


$


$/Boe


$


$/Boe










(In thousands, except per Boe amounts)

General and administrative

$

8,050


$

2.64


$

16,840


$

4.77

Stock-based compensation

(962)


(0.32)


(3,134)


(0.88)

Drilling participation agreement transaction costs



(20)


(0.01)

Adjusted G&A

$

7,088


$

2.32


$

13,686


$

3.88



Year Ended December 31, 2018


Year Ended December 31, 2017


$


$/Boe


$


$/Boe










(In thousands, except per Boe amounts)

General and administrative

$

41,666


$

3.38


$

76,024


$

5.10

Stock-based compensation (1)

(4,933)


(0.40)


(13,925)


(0.94)

Restructuring costs



(3,739)


(0.25)

Drilling participation agreement transaction costs



(2,901)


(0.19)

Adjusted G&A

$

36,733


$

2.98


$

55,459


$

3.72


1. Year ended December 31, 2018 excludes non-cash stock-based compensation included in accelerated vesting of employment compensation and employee termination benefits in the consolidated statement of operations. Year ended December 31, 2017 excludes non-cash stock-based compensation included in employee termination benefits in the consolidated statement of operations.

For further information, please contact:

Johna Robinson
Investor Relations
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 "2019 Operational and Capital Expenditure Guidance." These forward-looking statements are neither historical facts nor assurances of future performance and reflect SandRidge's current beliefs and expectations regarding future events and operating performance. The forward-looking statements include projections and estimates of the Company's corporate strategies, future operations, and development plans and appraisal programs, drilling inventory and locations, estimated oil, and natural gas and natural gas liquids production, reserves, price realizations and differentials, hedging program, projected operating, general and administrative and other costs, projected capital expenditures, tax rates, efficiency and cost reduction initiative outcomes, liquidity and capital structure and infrastructure assessment and investment. 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 and in comparable "Risk Factor" sections of our Quarterly Reports on Form 10-Q filed after such form 10-K. 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. (NYSE: SD) is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth oriented projects in Oklahoma and Colorado. The majority of the Company's production is generated from the Mississippian Lime formation in Oklahoma and Kansas. Development activity is currently focused on the Meramec formation in the Northwest STACK Play in Oklahoma and multiple oil rich Niobrara benches in the Colorado North Park Basin.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/sandridge-energy-inc-reports-financial-and-operational-results-for-fourth-quarter-and-full-year-2018-300806177.html

SOURCE SandRidge Energy, Inc.