SandRidge Energy

SandRidge Energy, Inc. (NYSE: SD) is an independent oil and gas company engaged in the development and acquisition of oil and gas properties. Its primary areas of operation are the Mid-Continent in Oklahoma and Kansas.

Press Release Details

SANDRIDGE ENERGY, INC. ANNOUNCES FINANCIAL AND OPERATING RESULTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2022

05/04/2022

OKLAHOMA CITY, May 4, 2022 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE: SD) today announced financial and operational results for the three month period ended March 31, 2022.

Recent Highlights

  • Generated Adjusted EBITDA(1) of $39.4 million in the first quarter compared to $37.5 million in the prior quarter
  • First quarter net income was $34.7 million, or $0.95 per share. Adjusted net income was $34.9 million, or $0.95 per share
  • First quarter production of 17.8 MBoed compared to Mid-Continent production of 17.5 MBoed in the same period of 2021, despite no drilling or completion activity over the prior twelve months
  • During the first quarter, the Company proactively procured approximately $4.7 million worth of materials related to its 2022 capital program, helping to mitigate the impacts of inflation for goods and services
  • As of March 31, 2022, the Company returned 139 wells to production since the beginning of 2021 that were previously curtailed due to the 2020 commodity price downturn
  • The Company had no open hedge positions as of March 31, 2022
  • First quarter adjusted G&A(1) of $2.2 million, or $1.35 per Boe, compared to $2.5 million, or $1.46 per Boe in the prior quarter

Financial Results & Update

Profitability & Realized Pricing

For the three-months ended March 31, 2022, the Company reported net income of $34.7 million, or $0.95 per share, and net cash provided by operating activities of $32.2 million. After adjusting for certain items, the Company's adjusted net income(1) amounted to $34.9 million, or $0.95 per share, operating cash flow(2) totaled $39.1 million and adjusted EBITDA(1) was $39.4 million for the quarter. The Company defines and reconciles adjusted net income, operating cash flow, adjusted EBITDA, and other non-GAAP financial measures to the most directly comparable Generally Accepted Accounting Principles in the United States ("GAAP") measure in supporting tables at the conclusion of this press release.

First quarter realized oil, natural gas, and natural gas liquids prices, before the impact of derivatives,(2) were $92.35, $3.84 and $33.73, respectively, compared to $75.72, $3.94 and $28.39 in the prior quarter. The table below compares the Company's first quarter oil and gas realizations to the daily average spot prices for Henry Hub and West Texas Intermediate ("WTI"). Since the end of the first quarter, commodity prices have continued to rise, further boosting the Company's cash flow generation potential.


Three Months Ended
March 31, 2022

Natural Gas


     Daily Average Spot Price - NYMEX Henry Hub

$4.67

     SandRidge Natural Gas Realization

$3.84

     SandRidge Differential to Henry Hub

82%

     2022E Differential Guidance Published March 9, 2022

~70%



Oil


     Daily Average Spot Price - NYMEX WTI

$95.02

     SandRidge Oil Realization

$92.35

     SandRidge Differential to WTI

97%

     2022E Differential Guidance Published March 9, 2022

~97%



Natural Gas Liquids ("NGL")


     SandRidge NGL Realization

$33.73

     SandRidge Differential to WTI

35%

     2022E Differential Guidance Published March 9, 2022

~30%

 

Operating Costs

During the first quarter of 2022, lease operating expense ("LOE") was $10.9 million or $6.76 per Boe compared to $9.7 million, or $5.74 per Boe in the prior quarter. The increase is primarily due to a higher number of producing wells, higher workover expense associated with our well reactivation program, and higher service and materials costs due to recent inflation.

For the three months ended March 31, 2022, general and administrative expense ("G&A") was $2.5 million, or $1.57 per Boe compared to $2.8 million, or $1.67 per Boe for the three months ended December 31, 2021. Adjusted G&A(1) was  $2.2 million, or $1.35 per Boe during the first quarter of 2022 compared to $2.5 million, or $1.46 per Boe during the fourth quarter of 2021.

Operational Results & Update

Production

Production totaled 1,606 MBoe (17.8 MBoed, 13.3% oil, 32.8% NGLs and 53.9% natural gas) for the three-months ended March 31, 2022 compared to 1,574 MBoe (17.5 MBoed, 14.0% oil, 33.1% NGLs, and 52.9% natural gas) of Mid-Continent production in the same period of 2021, representing an increase of approximately two percent despite no new drilling or completion activity over the prior twelve months.

2022 Development Program

During the first quarter, SandRidge proactively procured approximately $4.7 million worth of materials related to its 2022 capital program in order to secure favorable pricing in relationship to the current inflationary environment. Approximately $0.9 million of these costs were recorded as prepaid expenses. All of these expenditures are in line with the annual guidance figures published in conjunction with the announcement of the Company's 2022 capital development program on March 9, 2022.

Well Reactivation & Rod Pump Conversion Program

During the first quarter of 2022, the Company continued returning wells to production that were previously curtailed due to the commodity price downturn in the first half of 2020 and, in many cases, improving their production potential through modest capital improvements. Improved commodity pricing resulting in high rates of return, along with low execution risk, support the Company's belief that these projects represent an efficient use of capital. During the first three months of 2022, the Company brought 10 wells back online, bringing the total since the beginning of 2021 to 139. SandRidge currently expects to return approximately 30 wells to production and complete approximately 35 artificial lift conversions throughout 2022 and continues to evaluate its inventory of such projects.

Environmental, Social, and Governance ("ESG")

SandRidge maintains its Environmental, Social, and Governance ("ESG") commitment, to include no routine flaring of produced natural gas. The Company continues to explore the technical and commercial viability of Carbon Capture, Utilization, and Sequestration ("CCUS") across its owned and operated assets through its partnership with the University of Oklahoma.

Liquidity and Capital Structure

As of March 31, 2022, the Company had $165.8 million of cash and cash equivalents, including restricted cash. The Company has no outstanding term or revolving debt obligations.

Conference Call Information

The Company will host a conference call to discuss these results on Thursday, May 5, 2022 at 10:00 am CT. The conference call can be accessed by registering online at https://conferencingportals.com/event/zyeigzBU at which time registrants will receive dial-in information as well as a conference ID. At the time of the call, participants will dial in using the participant number and conference ID provided upon registration.

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.

SandRidge's current 2022 investor presentation, published on March 9, 2022, can be found on the Company's website at http://investors.sandridgeenergy.com/Investor-Relations/.

Contact Information

Investor Relations 
SandRidge Energy, Inc. 
1 E. Sheridan Ave. Suite 500 
Oklahoma City, OK 73104 
investors@sandridgeenergy.com

About SandRidge Energy, Inc.

SandRidge Energy, Inc. (NYSE: SD) is an independent oil and gas company engaged in the development and acquisition of oil and gas properties. Its primary area of operations is the Mid-Continent region in Oklahoma and Kansas.  Further information can be found at www.sandridgeenergy.com.

 

-Tables to Follow-










(1)

See "Non-GAAP Financial Measures" section at the end of this press release for non-GAAP financial measures definitions.

(2)

See "Operational and Financial Statistics" section at the end of this press release for impacts of derivatives on commodity
price realizations.

 

Operational and Financial Statistics  

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


Three Months Ended

March 31,


2022


2021

Production - Total




Oil (MBbl)

214


288

NGL (MBbl)

526


521

Natural Gas (MMcf)

5,195


4,993

Oil equivalent (MBoe)

1,606


1,641

Daily production (MBoed)

17.8


18.2





Average price per unit




Realized oil price per barrel - as reported

$                92.35


$                53.99

Realized impact of derivatives per barrel


Net realized price per barrel

$                92.35


$                53.99





Realized NGL price per barrel - as reported

$                33.73


$                17.00

Realized impact of derivatives per barrel(1)

(0.59)


Net realized price per barrel

$                33.14


$                17.00





Realized natural gas price per Mcf - as reported

$                  3.84


$                  1.85

Realized impact of derivatives per Mcf (1)

(0.15)


Net realized price per Mcf

$                  3.69


$                  1.85





Realized price per Boe - as reported

$                35.80


$                20.49

Net realized price per Boe - including impact of derivatives

$                35.12


$                20.49





Average cost per Boe




Lease operating

$                  6.76


$                  4.85

Production, ad valorem, and other taxes

$                  2.56


$                  1.33

Depletion (2)

$                  1.50


$                  1.53





Earnings per share (3)




Earnings per share applicable to common stockholders




Basic

$                  0.95


$                  0.97

Diluted

$                  0.94


$                  0.94





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




Basic

$                  0.95


$                  0.48

Diluted

$                  0.94


$                  0.47





Weighted average number of shares outstanding (in thousands)




Basic

36,635


36,156

Diluted 

37,019


37,439





(1) There were no open commodity derivative contracts as of March 31, 2022.




(2) Includes accretion of asset retirement obligation.




(3) Earnings per share amounts for the three months ended March 31, 2021 was impacted by the $19.7
million gain recognized on the sale of our North Park Basin assets in Colorado. See below for the section
of this release that reconciles Net Income (Loss) Available to Common Stockholders to Adjusted Net
Income (Loss) Available to Common Stockholders.




 

Capital Expenditures  

The table below presents actual results of the Company's capital expenditures for the three months ended March 31, 2022.


Three Months Ended


March 31, 2022


(In thousands)



Drilling, completion and capital workovers(1)

$                            5,691

Other capital expenditures

287

Total Capital Expenditures

$                            5,978

(excluding acquisitions and plugging and abandonment)




(1) The Company capitalized $3.9 million in inventory primarily associated with the planned 2022 capital program.


 

Capitalization

The Company's capital structure as of March 31, 2022 and December 31, 2021 is presented below:


March 31, 2022


December 31, 2021






(In thousands)

Cash, cash equivalents and restricted cash

$                              165,778


$                            139,524





Stockholders' equity




Common stock

$                                       37


$                                     37

Warrants

88,520


88,520

Additional paid-in capital

1,062,886


1,062,737

Accumulated deficit

(871,248)


(905,972)

Total SandRidge Energy, Inc. stockholders' equity

280,195


245,322





Total capitalization

$                              280,195


$                            245,322

 

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated IncomeStatements (Unaudited)

(In thousands, except per share amounts)



Three Months Ended March 31,


2022


2021

Revenues




     Oil, natural gas and NGL

$            57,487


$            33,623

          Total revenues

57,487


33,623

Expenses




     Lease operating expenses

10,862


7,954

     Production, ad valorem, and other taxes

4,110


2,176

     Depreciation and depletion—oil and natural gas

2,401


2,505

     Depreciation and amortization—other

1,575


1,494

     General and administrative

2,530


2,090

     Restructuring expenses

209


2,054

     Employee termination benefits


49

     (Gain) loss on derivative contracts

1,064


     (Gain) loss on sale of assets


(19,713)

     Other operating (income) expense, net

(64)


(48)

          Total expenses

22,687


(1,439)

          Income from operations

34,800


35,062

Other income (expense)




     Interest expense, net

(152)


(47)

Other income (expense), net

76


28

          Total other income (expense)

(76)


(19)

Income before income taxes

34,724


35,043

Income tax expense (benefit)


Net income

$            34,724


$            35,043

Net income per share




     Basic

$               0.95


$               0.97

     Diluted

$               0.94


$               0.94

Weighted average number of common shares outstanding




     Basic

36,635


36,156

     Diluted

37,019


37,439

 

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)



March 31,
2022


December 31,
2021

ASSETS




Current assets




     Cash and cash equivalents

$         163,514


$         137,260

     Restricted cash - other

2,264


2,264

     Accounts receivable, net

26,711


21,505

     Prepaid expenses

3,141


626

     Other current assets

80


80

          Total current assets

195,710


161,735

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




     Proved

1,459,713


1,454,016

     Unproved

12,478


12,255

     Less: accumulated depreciation, depletion and impairment

(1,374,767)


(1,373,217)


97,424


93,054

Other property, plant and equipment, net

96,282


97,791

Other assets

294


332

          Total assets

$         389,710


$         352,912





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




     Accounts payable and accrued expenses

$           47,292


$           45,779

     Asset retirement obligation

17,373


17,606

     Derivative contracts


21

     Other current liabilities

643


627

          Total current liabilities

65,308


64,033

Asset retirement obligation

42,554


41,762

Other long-term obligations

1,653


1,795

          Total liabilities

109,515


107,590

Stockholders' Equity




 Common stock, $0.001 par value; 250,000 shares authorized; 36,726 issued and outstanding at
March 31, 2022 and 36,675 issued and outstanding at December 31, 2021

37


37

     Warrants

88,520


88,520

     Additional paid-in capital

1,062,886


1,062,737

     Accumulated deficit

(871,248)


(905,972)

          Total stockholders' equity

280,195


245,322

          Total liabilities and stockholders' equity

$         389,710


$         352,912

 

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated Cash Flows (Unaudited)

(In thousands)



Three Months Ended March 31,



2022


2021

CASH FLOWS FROM OPERATING ACTIVITIES





     Net Income


$              34,724


$              35,043

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





          Provision for doubtful accounts



21

          Depreciation, depletion, and amortization


3,975


3,999

          Debt issuance costs amortization



16

          (Gain) loss on derivative contracts


1,064


          Cash (paid) received on settlement of derivative contracts


(1,085)


          (Gain) loss on sale of assets



(19,713)

          Stock-based compensation


356


235

          Other


38


35

          Changes in operating assets and liabilities


(6,879)


(5,305)

               Net cash provided by (used in) operating activities


32,193


14,331

CASH FLOWS FROM INVESTING ACTIVITIES





          Capital expenditures for property, plant and equipment


(5,629)


(3,094)

          Purchase of other property and equipment


(49)


(59)

          Proceeds from sale of assets


59


37,238

               Net cash provided by (used in) investing activities


(5,619)


34,085

CASH FLOWS FROM FINANCING ACTIVITIES





         Reduction of financing lease liability


(113)


(74)

          Debt issuance costs



(74)

          Proceeds from exercise of stock options


28


          Cash paid for tax obligations on vested stock awards


(235)


(19)

               Net cash provided by (used in) financing activities


(320)


(167)

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


26,254


48,249

CASH, CASH EQUIVALENTS and RESTRICTED CASH, beginning of year


139,524


28,266

CASH, CASH EQUIVALENTS and RESTRICTED CASH, end of period


$            165,778


$              76,515

Supplemental Disclosure of Cash Flow Information





          Cash paid for interest, net of amounts capitalized


$                   (145)


$                    (92)

Supplemental Disclosure of Noncash Investing and Financing Activities





          Purchase of PP&E in accounts payable


$                   680


$                1,342

          Right-of-use assets obtained in exchange for financing lease obligations


$                     —


$                   363

 

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 March 31,


2022


2021






(In thousands)

Net cash provided by operating activities

$                32,193


$                14,331

Changes in operating assets and liabilities

6,879


5,305

Operating cash flow

$                39,072


$                19,636

 

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

The Company defines EBITDA as net income (loss) before income tax (benefit) expense, interest expense, depreciation and amortization - other and depreciation and depletion - oil and natural gas. Adjusted EBITDA, as presented herein, is EBITDA excluding items that management 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 industry. The Company's adjusted EBITDA may not be comparable to similarly titled measures used by other companies.


Three Months Ended March 31,


2022


2021






(In thousands)

Net Income

$                34,724


$                35,043

Adjusted for




     Interest expense

152


48

     Depreciation and amortization - other

1,575


1,494

     Depreciation and depletion - oil and natural gas

2,401


2,505

EBITDA

38,852


39,090





Stock-based compensation (1)

356


219

(Gain) loss on derivative contracts

1,064


(Gain) loss on sale of assets


(19,714)

Cash (paid) received upon settlement of derivative contracts

(1,085)


Employee termination benefits


49

Restructuring expenses

209


2,054

Adjusted EBITDA

$                39,396


$                21,698


(1)  Excludes non-cash stock-based compensation included in employee termination benefits.

 

Reconciliation of Cash Provided by Operating Activities to Adjusted EBITDA


Three Months Ended March 31,


2022


2021






(In thousands)

Net cash provided by operating activities

$                32,193


$                14,331

Changes in operating assets and liabilities

6,879


5,305

Interest expense

152


48

Employee termination benefits (1)


49

Other

172


1,965

Adjusted EBITDA

$                39,396


$                21,698


(1)  Excludes associated stock-based compensation.

 

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

The Company defines adjusted net income (loss) as net income (loss) excluding items that management 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 (loss) 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 (loss) is not a measure of financial performance under GAAP and should not be considered a substitute for net income (loss) available to common stockholders.


Three Months Ended March 31, 2022


Three Months Ended March 31, 2021


$


$/Diluted Share


$


$/Diluted Share


(In thousands, except per share amounts)

Net income available to common stockholders

$               34,724


$                     0.94


$               35,043


$                     0.94

Loss (Gain)  on derivative contracts

1,064


0.03



(Gain) loss on sale of assets



(19,714)


(0.53)

Cash (paid) received upon settlement of derivative
contracts

(1,085)


(0.03)



Employee termination benefits



49


Restructuring expenses

209



2,054


0.05

Adjusted net income available to common stockholders

$               34,912


$                     0.94


$               17,432


$                     0.47










Basic


Diluted 


Basic


Diluted

Weighted average number of common shares
outstanding

36,635


37,019


36,156


37,439

Total adjusted net income per share

$                   0.95


$                     0.94


$                   0.48


$                     0.47

 

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, if any, 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, if any, as shown in the following tables:


Three Months Ended March 31, 2022


Three Months Ended March 31, 2021


$


$/Boe


$


$/Boe


(In thousands, except per Boe amounts)

General and administrative (1)

$                  2,530


$                    1.57


$                  2,090


$                    1.27

Stock-based compensation (2)

(356)


(0.22)


(219)


(0.13)

Adjusted G&A

$                  2,174


$                    1.35


$                  1,871


$                    1.14



(1)

General and administrative was impacted by a $0.4 million legal retainer refund that was recorded as a credit, reducing general and administrative expense in
the first quarter of 2021.

(2)

Excludes non-cash stock-based compensation included in employee termination benefits.

 

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. 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, development plans and appraisal programs, drilling inventory and locations,  estimated oil, natural gas and natural gas liquids production, 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 the Company's unaudited proved developed PV-10 reserve value of its Mid-Continent assets. 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 independent oil and gas company engaged in the development and acquisition of oil and gas properties. Its primary areas of operation are the Mid-Continent in Oklahoma and Kansas. Further information can be found at www.sandridgeenergy.com.

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SOURCE SandRidge Energy, Inc.

Contact IR

SandRidge Energy, Inc. (NYSE: SD)
One East Sheridan, Suite 500
Oklahoma City, OK 73104

Sarah Newell, Vice President

The Bank of New York Mellon Trust Company, N.A.,

601 Travis, Floor 16,

Houston, Texas 77002

Investor Relations Inquiries:

Technical Assistance: