SandRidge Energy, Inc. Reports Financial and Operational Results for First Quarter 2012

Three Months Ended March 31,

2012

2011

Production

Oil (MBbl) ⁽¹⁾

3,427

2,581

Natural gas (MMcf)

15,746

17,266

Oil equivalent (MBoe)

6,051

5,459

Daily production (MBoed)

66.5

60.7

Average price per unit

Realized oil price per barrel - as reported ⁽¹⁾

$  89.99

$  79.76

Realized impact of derivatives per barrel ⁽¹⁾

(3.72)

(7.50)

Net realized price per barrel ⁽¹⁾

$  86.27

$  72.26

Realized natural gas price per Mcf - as reported

$    2.10

$    3.54

Realized impact of derivatives per Mcf

0.25

(0.10)

Net realized price per Mcf

$    2.35

$    3.44

Realized price per Boe - as reported

$  56.42

$  48.90

Net realized price per Boe - including impact of derivatives

$  54.96

$  45.05

Average cost per Boe

Lease operating 

$  13.77

$  13.55

Production taxes

2.03

1.94

General and administrative

General and administrative, excluding stock-based compensation ⁽²⁾

6.43

4.69

Stock-based compensation

1.88

1.61

Depletion

14.82

13.53

Lease operating cost per Boe

Excluding offshore and tertiary recovery

$  13.19

$  12.70

Offshore operations

33.87

29.26

Tertiary recovery operations

31.14

42.77

Earnings per share

Loss per share applicable to common stockholders

Basic

$   (0.58)

$   (0.79)

Diluted

(0.58)

(0.79)

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

Basic

$    0.02

$   (0.05)

Diluted

0.04

(0.02)

Weighted average number of common shares outstanding (in thousands)

Basic

400,597

398,251

Diluted ⁽³⁾

500,116

495,579

⁽¹⁾

Includes NGLs.

⁽²⁾

Includes transaction costs of $2.9 million and $1.3 million for the three-month periods ended March 31, 2012 and 2011, respectively.

⁽³⁾

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

Three Months Ended March 31,

2012

2011

(in thousands)

Drilling and production

Mid-Continent

$219,451

$101,927

Permian Basin

162,319

170,822

Gulf of Mexico

-

24

WTO/Tertiary/Other

12,857

16,791

394,627

289,564

Leasehold and seismic

Mid-Continent

87,739

97,109

Permian Basin

2,956

5,167

Gulf of Mexico

-

55

WTO/Tertiary/Other

1,863

3,431

92,558

105,762

Pipe inventory

4,649

3,711

Total exploration and development ⁽¹⁾

491,834

399,037

Drilling and oil field services

7,916

6,763

Midstream

23,975

4,172

Other - general

45,933

6,197

Total capital expenditures, excluding acquisitions

569,658

416,169

Acquisitions

10,511

1,548

Total capital expenditures

$580,169

$417,717

Plugging and abandonment

$ 3,421

$ 2,443

(1)

Exploration and development expenditures for the three-month periods ended March 31, 2012 and 2011 exclude $10.0 million and $19.0 million, respectively, of estimated loss on Century Plant construction contract.

Quarter Ending

3/31/2012

6/30/2012

9/30/2012

12/31/2012

Oil

Swap Volume (MMBbls)

3.04

3.73

4.05

4.20

Swap

$99.21

$100.23

$100.52

$100.67

Collar Volume (MMBbls)

-

0.07

0.06

0.05

Collar:  High

-

$114.00

$114.00

$114.00

Collar:  Low

-

$85.00

$85.00

$85.00

LLS Basis Volume (MMBbls)

-

0.75

0.38

0.37

Swap

-

$17.05

$17.48

$17.49

Natural Gas

Swap Volume (Bcf)

1.82

2.48

0.88

0.48

Swap

$4.90

$5.23

$6.12

$5.98

Collar Volume (Bcf)

-

1.41

2.16

2.27

Collar:  High

-

$6.62

$6.58

$6.58

Collar:  Low

-

$4.11

$4.04

$4.09

Year Ending

12/31/2012

12/31/2013

12/31/2014

12/31/2015

Oil

Swap Volume (MMBbls)

15.02

17.42

13.91

7.64

Swap

$100.22

$96.40

$89.95

$84.77

Collar Volume (MMBbls)

0.17

0.17

-

-

Collar:  High

$114.00

$102.50

-

-

Collar:  Low

$85.00

$80.00

-

-

LLS Basis Volume (MMBbls)

1.50

-

-

-

Swap

$17.27

-

-

-

Natural Gas

Swap Volume (Bcf)

5.65

-

-

-

Swap

$5.32

-

-

-

Collar Volume (Bcf)

5.84

6.86

0.94

1.01

Collar:  High

$6.59

$6.71

$7.78

$8.55

Collar:  Low

$4.08

$3.78

$4.00

$4.00

Basis Swaps Volume (Bcf)

-

14.60

-

-

Swap

-

$0.46

-

-

March 31,

December 31,

2012

2011

(in thousands)

Cash and cash equivalents

$   127,842

$       207,681

Current maturities of long-term debt

$      1,070

$          1,051

Long-term debt (net of current maturities)

Senior credit facility

-

-

Mortgage

14,702

14,978

Senior Notes

Senior Floating Rate Notes due 2014

350,000

350,000

9.875% Senior Notes due 2016, net

355,078

354,579

8.0% Senior Notes due 2018

750,000

750,000

8.75% Senior Notes due 2020, net

443,704

443,568

7.5% Senior Notes due 2021

900,000

900,000

  Total debt 

2,814,554

2,814,176

Stockholders' equity

Preferred stock

8

8

Common stock

401

399

Additional paid-in capital

4,632,544

4,568,856

Treasury stock, at cost

(6,617)

(6,158)

Accumulated deficit

(3,169,153)

(2,937,094)

Total SandRidge Energy, Inc. stockholders' equity

1,457,183

1,626,011

Noncontrolling interest

933,876

922,939

Total capitalization

$5,205,613

$    5,363,126

Year Ending

December 31, 2012

Previous

Updated

Projection as of

Projection as of

February 23, 2012

May 3, 2012

Production

Oil (MMBbls) ⁽¹⁾

18.2

18.2

Natural Gas (Bcf)

84.8

84.8

Total (MMBoe)

32.3

32.3

Differentials

Oil ⁽¹⁾

$9.00

$9.00

Natural Gas

0.50

0.50

Costs per Boe

Lifting

$16.10 - $17.80

$16.10 - $17.80

Production Taxes

1.75 - 1.95

1.75 - 1.95

DD&A - oil & gas

15.90 - 17.65

15.90 - 17.65

DD&A - other

1.75 - 1.95

1.75 - 1.95

Total DD&A

$17.65 - $19.60

$17.65 - $19.60

G&A - cash

4.30 - 4.75

4.30 - 4.75

G&A - stock

1.15 - 1.30

1.15 - 1.30

Total G&A

$5.45 - $6.05

$5.45 - $6.05

Interest Expense

$8.70 - $9.60

$8.70 - $9.60

EBITDA from Oilfield Services, Midstream and Other ($ in millions) ⁽²⁾

$43.5

$43.5

Adjusted Net Income Attributable to Noncontrolling Interest ($ in millions) ⁽³⁾

$113.8

$142.6

P&A Cash Cost ($ in millions)

$35.2

$35.2

Corporate Tax Rate

0%

0%

Deferral Rate

0%

0%

Shares Outstanding at End of Period (in millions)

Common Stock

493.0

493.0

Preferred Stock (as converted)

90.1

90.1

Fully Diluted

583.1

583.1

Capital Expenditures ($ in millions)

Exploration and Production

$1,550

$1,550

Land and Seismic

145

145

Total Exploration and Production

$1,695

$1,695

Oil Field Services

20

20

Midstream and Other

135

135

Total Capital Expenditures

$1,850

$1,850

(1)

Includes NGLs.

(2)

EBITDA from Oilfield Services, Midstream 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, Midstream and Other is Net Income from Oilfield Services, Midstream 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.

(3)

Adjusted Net Income Attributable to Noncontrolling Interest is a non-GAAP financial measure as it excludes unrealized gain or loss on 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.

Three Months Ended March 31,

2012

2011

(in thousands)

Net cash provided by operating activities

$230,910

$ 79,662

(Deduct) add

Changes in operating assets and liabilities

(77,970)

22,665

Operating cash flow

$152,940

$102,327

Three Months Ended March 31,

2012

2011

(in thousands)

Net loss

$(218,178)

$(302,344)

Adjusted for

Income tax expense

71

88

Interest expense ⁽¹⁾

68,421

61,208

Depreciation and amortization - other

14,513

13,093

Depreciation and depletion - oil and natural gas

87,066

71,460

Accretion of asset retirement obligation

2,607

2,426

EBITDA

(45,500)

(154,069)

Provision for doubtful accounts

134

2

Inventory obsolescence

49

-

Interest income

(102)

(5)

Stock-based compensation

10,523

8,218

Unrealized losses on derivative contracts

127,836

267,254

Realized gains on out-of-period derivative

contract settlements

-

(12,390)

Non-cash realized losses on amended derivative contracts

117,108

-

Non-cash realized losses on financing derivatives

1,344

2,348

Other non-cash income

(2,360)

(160)

Loss (gain) on sale of assets

3,080

(201)

Transaction costs

2,901

1,342

Loss on extinguishment of debt

-

36,181

Non-cash portion of noncontrolling interest ⁽²⁾

(29,594)

-

Adjusted EBITDA

$ 185,419

$ 148,520

⁽¹⁾

Excludes unrealized gain on interest rate swaps of ($1.4) million and ($1.8) million for the three-month periods ended March 31, 2012 and 2011, respectively.

⁽²⁾

Represents depreciation and depletion of ($7.5) million, unrealized losses on commodity derivative contracts of ($22.0) million and income tax expense of ($0.1) million for the three-month period ended March 31, 2012 attributable to noncontrolling interests.

Three Months Ended March 31,

2012

2011

(in thousands)

Net cash provided by operating activities

$230,910

$ 79,662

Changes in operating assets and liabilities

(77,970)

22,665

Interest expense ⁽¹⁾

68,421

61,208

Realized gains on out-of-period derivative

contract settlements

-

(12,390)

Transaction costs

2,901

1,342

Noncontrolling interest - SDT ⁽²⁾

(13,922)

-

Noncontrolling interest - PER ⁽²⁾

(17,699)

-

Noncontrolling interest - Other ⁽²⁾

73

(6)

Other non-cash items

(7,295)

(3,961)

Adjusted EBITDA

$185,419

$148,520

⁽¹⁾

Excludes unrealized gain on interest rate swaps of ($1.4) million and ($1.8) million for the three-month periods ended March 31, 2012 and 2011, respectively.

⁽²⁾

Excludes depreciation and depletion of ($7.5) million, unrealized losses on commodity derivative contracts of ($22.0) million and income tax expense of ($0.1) million for the three-month period ended March 31, 2012 attributable to noncontrolling interests.

Three Months Ended March 31,

2012

2011

(in thousands, except per share data)

Loss applicable to common stockholders

$ (232,059)

$(316,284)

Unrealized losses on derivative contracts ⁽¹⁾

105,817

267,254

Realized gains on out-of-period derivative

contract settlements

-

(12,390)

Non-cash realized losses on amended derivative contracts

117,108

-

Non-cash realized losses on financing derivatives

1,344

2,348

Loss (gain) on sale of assets

3,080

(201)

Transaction costs

2,901

1,342

Financing commitment fees

10,875

-

Loss on extinguishment of debt

-

36,181

Other non-cash income

(1,785)

-

Effect of income taxes

79

86

Adjusted net income available (loss applicable) to common

stockholders

7,360

(21,664)

Preferred stock dividends

13,881

13,940

Total adjusted net income (loss)

$ 21,241

$ (7,724)

Weighted average number of common shares outstanding

Basic

400,597

398,251

Diluted ⁽²⁾

500,116

495,579

Total adjusted net income (loss)

Per share - basic

$ 0.02

$ (0.05)

Per share - diluted

$ 0.04

$ (0.02)

⁽¹⁾

Excludes unrealized losses on commodity derivative contracts of ($22.0) million for the three-month period ended March 31, 2012 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.

Three Months Ended

March 31,

2012

2011

(Unaudited)

Revenues

Oil and natural gas

$ 341,365

$ 266,942

Drilling and services

29,309

21,034

Midstream and marketing

8,306

22,258

Other

2,655

2,614

Total revenues

381,635

312,848

Expenses

Production

83,310

73,957

Production taxes

12,254

10,575

Drilling and services

17,560

15,041

Midstream and marketing

7,954

22,283

Depreciation and depletion - oil and natural gas

87,066

71,460

Depreciation and amortization - other

14,513

13,093

Accretion of asset retirement obligation

2,607

2,426

General and administrative

50,301

34,414

Loss on derivative contracts

254,646

277,628

Loss (gain) on sale of assets

3,080

(201)

Total expenses

533,291

520,676

Loss from operations

(151,656)

(207,828)

Other income (expense)

Interest expense

(66,965)

(59,438)

Loss on extinguishment of debt

-

(36,181)

Other income, net

2,468

1,197

Total other expense

(64,497)

(94,422)

Loss before income taxes

(216,153)

(302,250)

Income tax expense

71

88

Net loss

(216,224)

(302,338)

Less: net income attributable to noncontrolling interest

1,954

6

Net loss attributable to SandRidge Energy, Inc.

(218,178)

(302,344)

Preferred stock dividends

13,881

13,940

Loss applicable to SandRidge Energy, Inc. common stockholders

$(232,059)

$(316,284)

Loss per share

Basic

$ (0.58)

$ (0.79)

Diluted

$ (0.58)

$ (0.79)

Weighted average number of common shares outstanding

Basic

400,597

398,251

Diluted

400,597

398,251

March 31,

December 31,

2012

2011

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$   127,842

$       207,681

Accounts receivable, net

240,636

206,336

Derivative contracts

7,526

4,066

Inventories

9,491

6,903

Costs in excess of billings

1,621

-

Other current assets

32,324

16,854

Total current assets

419,440

441,840

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

Proved

9,159,518

8,969,296

Unproved

748,953

689,393

Less: accumulated depreciation, depletion and impairment

(4,874,325)

(4,791,534)

5,034,146

4,867,155

Other property, plant and equipment, net

576,668

522,269

Restricted deposits

27,904

27,912

Derivative contracts

1,109

26,415

Goodwill

235,396

235,396

Other assets

83,436

98,622

Total assets

$6,378,099

$    6,219,609

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt

$      1,070

$          1,051

Accounts payable and accrued expenses

601,785

506,784

Billings and estimated contract loss in excess of costs incurred

34,310

43,320

Derivative contracts

97,462

115,435

Asset retirement obligation

32,906

32,906

Total current liabilities

767,533

699,496

Long-term debt

2,813,484

2,813,125

Derivative contracts

292,110

49,695

Asset retirement obligation

100,126

95,210

Other long-term obligations

13,787

13,133

Total liabilities

3,987,040

3,670,659

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, 2012 and December 31, 2011; aggregate liquidation preference

of $265,000

3

3

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

at March 31, 2012 and December 31, 2011; aggregate liquidation preference

of $200,000

2

2

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

at March 31, 2012 and December 31, 2011; aggregate liquidation preference

of $300,000

3

3

Common stock, $0.001 par value, 800,000 shares authorized; 416,478 issued and

415,544 outstanding at March 31, 2012 and 412,827 issued and 411,953

 outstanding at December 31, 2011

401

399

Additional paid-in capital

4,632,544

4,568,856

Treasury stock, at cost

(6,617)

(6,158)

Accumulated deficit

(3,169,153)

(2,937,094)

Total SandRidge Energy, Inc. stockholders' equity

1,457,183

1,626,011

Noncontrolling interest

933,876

922,939

Total equity

2,391,059

2,548,950

Total liabilities and equity

$6,378,099

$    6,219,609