SandRidge Energy, Inc. Reports Financial and Operational Results for Second Quarter and First Six Months of 2012

Mississippian Production Averaged 25.2 MBoe per Day in the Second Quarter, a 31% Increase from the Previous Quarter

Drilled Five Second Quarter Mississippian Wells in Three Counties with 30-day IPs Over 1,000 Boe per Day

Record Oil and Total Production of 4.6 MMBbls and 8.2 MMBoe in the Second Quarter

Increasing 2012 Production Guidance by 700 MBoe to 33 MMBoe, a 54% Increase in Oil Production and a 41% Increase in Total Production from 2011

Aug 02, 2012, 16:05 ET from SandRidge Energy, Inc.

OKLAHOMA CITY, Aug. 2, 2012 /PRNewswire/ -- SandRidge Energy, Inc. (NYSE: SD) today announced financial and operational results for the quarter and six months ended June 30, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20120416/DA88110LOGO)

Key Financial Results

Second Quarter

  • Adjusted EBITDA of $269 million for second quarter 2012 compared to $157 million in second quarter 2011.
  • Operating cash flow of $222 million for second quarter 2012 compared to $136 million in second quarter 2011.
  • Net income available to common stockholders of $809 million, or $1.47 per diluted share, for second quarter 2012 compared to net income available to common stockholders of $196 million, or $0.42 per diluted share, in second quarter 2011.
  • Adjusted net income of $36.8 million, or $0.07 per diluted share, for second quarter 2012 compared to adjusted net loss of $1.6 million, or $0.00 per diluted share, in second quarter 2011.

Six Months

  • Adjusted EBITDA of $454 million for the first six months of 2012 compared to $308 million in the first six months of 2011.
  • Operating cash flow of $373 million for the first six months of 2012 compared to $239 million in the first six months of 2011.
  • Net income available to common stockholders of $577 million, or $1.14 per diluted share, for the first six months of 2012 compared to net loss applicable to common stockholders of $120 million, or $0.30 per diluted share, in the first six months of 2011.
  • Adjusted net income of $58.1 million, or $0.11 per diluted share, for the first six months of 2012 compared to adjusted net loss of $6.2 million, or $0.01 per diluted share, in the first six months of 2011.

Adjusted net income available (loss applicable) to common stockholders, adjusted EBITDA and 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" beginning on page 9.

Highlights

  • Mississippian daily average production grew 31% quarter over quarter and 199% from the comparable period in 2011
  • Current liquidity of $1.3 billion with cash balance of approximately $300 million. At June 30, no borrowings were outstanding under the credit facility and the leverage ratio was 2.9x
  • For the second half of 2012,  81% of projected oil production is hedged at over $100 per barrel and another 37 million barrels of oil are hedged from 2013 to 2015
  • Completed IPO of SandRidge Mississippian Trust II and sold units of SandRidge Mississippian Trust I raising $615 million in total net proceeds
  • Raised $130 million through the sale of non-core Tertiary assets producing approximately 1,100 Boe per day
  • Increasing 2012 production guidance to 33.0 MMBoe from 32.3 MMBoe and increasing 2012 capital expenditure guidance to $2.1 billion from $1.85 billion
  • Decreasing the 2012 mid-point Lifting cost guidance by 6%

    Drilling Activities

    SandRidge averaged 43 rigs operating during the second quarter of 2012 and drilled 297 wells. The company drilled a total of 547 wells during the first six months of 2012. A total of 317 gross (280 net) operated wells were completed and brought on production during the second quarter of 2012, bringing the total number of operated wells completed and brought on production during 2012 to 557 gross (493 net) wells.

    Mississippian Play. During the second quarter of 2012, SandRidge drilled 91 horizontal wells: 71 in Oklahoma and 20 in Kansas. This brings the total horizontal wells drilled during the first half of the year to 159 wells. Additionally, SandRidge drilled 20 disposal wells during the second quarter for a total of 37 disposal wells in the first half of 2012. To date, 872 horizontal wells have been drilled in the Mississippian play, including 392 drilled by SandRidge. SandRidge has an inventory of approximately 8,000 drilling locations on approximately 1.7 million net acres. The company presently has 33 rigs operating in the play: 19 drilling horizontal wells in Oklahoma, 10 drilling horizontal wells in Kansas and four drilling disposal wells. The company plans to drill approximately 380 horizontal wells in the Mississippian play during 2012 and exit the year with 33 rigs drilling horizontal wells.

    Permian Basin. The company drilled 206 wells during the second quarter of 2012 and currently holds approximately 225,000 net acres in the play. SandRidge plans to operate an average of 12 rigs in the Permian Basin throughout the year and plans to drill approximately 750 wells in 2012. The rigs will operate on the Central Basin Platform drilling primarily Grayburg/San Andres vertical wells at depths ranging from 4,500 feet to 7,500 feet.

    Gulf of Mexico. SandRidge plans to drill 9 operated wells and participate in the drilling of 3 non-operated wells during the second half of 2012. Additionally, SandRidge performed 10 operated recompletions during the second quarter and plans to perform 7 additional operated recompletions through the remainder of the year for a total of 17 operated recompletions.  SandRidge also expects to participate in 11 non-operated recompletions during 2012.

    Operational and Financial Statistics

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

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    Production

    Oil (MBbl) (1)

    4,556

    2,767

    7,982

    5,348

    Natural gas (MMcf)

    21,903

    17,239

    37,648

    34,505

    Oil equivalent (MBoe)

    8,206

    5,640

    14,257

    11,099

    Daily production (MBoed)

    90.2

    62.0

    78.3

    61.3

    Average price per unit

    Realized oil price per barrel - as reported (1)

    $                85.35

    $                89.09

    $                87.34

    $                84.59

    Realized impact of derivatives per barrel (1)

    4.41

    (12.83)

    0.92

    (10.26)

    Net realized price per barrel (1)

    $                89.76

    $                76.26

    $                88.26

    $                74.33

    Realized natural gas price per Mcf - as reported

    $                 1.87

    $                 3.81

    $                 1.96

    $                 3.67

    Realized impact of derivatives per Mcf

    0.52

    (0.50)

    0.41

    (0.21)

    Net realized price per Mcf

    $                 2.39

    $                 3.31

    $                 2.37

    $                 3.46

    Realized price per Boe - as reported

    $                52.37

    $                55.34

    $                54.09

    $                52.17

    Net realized price per Boe - including impact of derivatives

    $                56.21

    $                47.52

    $                55.68

    $                46.58

    Average cost per Boe

    Lease operating 

    $                14.93

    $                14.51

    $                14.43

    $                14.04

    Production taxes

    1.34

    2.25

    1.63

    2.09

    General and administrative

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

    6.07

    5.00

    6.22

    4.85

    Stock-based compensation

    1.45

    1.68

    1.63

    1.65

    Depletion (3)

    17.94

    13.51

    16.62

    13.52

    Lease operating cost per Boe

    Excluding offshore and tertiary recovery

    $                12.42

    $                13.24

    $                12.79

    $                12.97

    Offshore operations

    22.50

    64.62

    23.09

    43.02

    Tertiary recovery operations (4)

    32.97

    33.37

    31.93

    37.28

    Earnings per share

    Earnings (loss) per share applicable to common stockholders

    Basic

    $                 1.75

    $                 0.49

    $                 1.34

    $                (0.30)

    Diluted

    1.47

    0.42

    1.14

    (0.30)

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

    Basic

    $                 0.05

    $                (0.04)

    $                 0.07

    $                (0.09)

    Diluted

    0.07

    (0.00)

    0.11

    (0.01)

    Weighted average number of common shares outstanding (in thousands)

    Basic

    461,008

    398,435

    430,802

    398,343

    Diluted (5)

    560,640

    495,982

    530,378

    495,781

    (1)

    Includes NGLs.

    (2)

    Includes transaction costs of $11.7 million and $1.7 million for the three-month periods ended June 30, 2012 and 2011, respectively, and $14.6 million and $3.1 million for the six-month periods ended June 30, 2012 and 2011, respectively.

    (3)

    Includes accretion of asset retirement obligation.

    (4)

    Tertiary recovery properties sold June 2012.

    (5)

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

    Discussion of Second Quarter 2012 Financial Results

    Oil and natural gas revenue increased 38% to $430 million in second quarter 2012 from $312 million in the same period of 2011 as a result of increased oil production. Oil production increased 65% to 4.6 MMBbls from second quarter 2011 production of 2.8 MMBbls mainly due to continued development of the company's properties in the Mississippian play and Permian Basin and production contributed by the acquisition of Dynamic Offshore Resources, LLC ("Dynamic") in April 2012. Second quarter 2012 total production increased 45% to 8.2 MMBoe from 5.6 MMBoe in second quarter 2011. Realized reported prices, which exclude the impact of derivative settlements, were $85.35 per barrel and $1.87 per Mcf during second quarter 2012. Realized reported prices in the same period of 2011 were $89.09 per barrel and $3.81 per Mcf.

    Second quarter 2012 production expense was $14.93 per Boe compared to second quarter 2011 production expense of $14.51 per Boe. The increase was primarily due to the additional costs related to Dynamic's offshore operations. Excluding the impact of offshore and tertiary operations, production expense decreased to $12.42 per Boe in second quarter 2012 from $13.24 per Boe in the same period of 2011. The six percent decrease was the result of improving efficiencies throughout the company's core operations in the Mississippian play and Permian Basin.

    Depletion per unit in second quarter 2012 was $17.94 per Boe compared to $13.51 per Boe in the same period of 2011. The increase in rate per unit primarily resulted from the addition of Dynamic's properties to the company's depletable asset base and, to a lesser extent, from non-core asset sales in the first half of 2012 and the fourth quarter of 2011.

    Capital Expenditures

    The table below summarizes the company's capital expenditures for the three and six-month periods ended June 30, 2012 and 2011: 

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands)

    Drilling and production

    Mid-Continent

    $           215,985

    $           144,777

    $           435,436

    $           246,704

    Permian Basin

    180,987

    166,937

    343,306

    337,759

    Gulf of Mexico

    41,114

    98

    41,114

    122

    WTO/Tertiary/Other

    15,534

    8,318

    28,391

    25,109

    453,620

    320,130

    848,247

    609,694

    Leasehold and seismic

    Mid-Continent

    56,886

    70,521

    144,625

    167,630

    Permian Basin

    5,192

    15,335

    8,148

    20,502

    Gulf of Mexico

    9,820

    1

    9,820

    56

    WTO/Tertiary/Other

    912

    2,874

    2,775

    6,305

    72,810

    88,731

    165,368

    194,493

    Pipe inventory (1)

    (8,376)

    4,376

    (3,727)

    8,087

    Total exploration and development (2)

    518,054

    413,237

    1,009,888

    812,274

    Drilling and oil field services

    5,836

    8,030

    13,752

    14,793

    Midstream

    17,754

    4,462

    41,729

    8,635

    Other - general 

    20,410

    18,167

    66,343

    24,363

    Total capital expenditures, excluding acquisitions

    562,054

    443,896

    1,131,712

    860,065

    Acquisitions (3)

    751,064

    7,601

    761,575

    9,149

    Total capital expenditures

    $        1,313,118

    $           451,497

    $        1,893,287

    $           869,214

    Plugging and abandonment

    $            21,721

    $              2,595

    $            25,142

    $              5,038

    (1)

    Pipe inventory expenditures for the three and six-month periods ended June 30, 2012 represent transfers of pipe inventory to the full cost pool for use in drilling and production activities.

    (2)

    Exploration and development expenditures for the six-month periods ended June 30, 2012 and 2011 exclude $10.0 million and $19.0 million, respectively, of estimated loss on Century Plant construction contract.

    (3)

    Acquisition expenditures for the three and six-month periods ended June 30, 2012 exclude common stock valued at approximately $542.1 million issued in connection with and tax liability adjustments resulting from the Dynamic acquisition.

    Derivative Contracts

    The tables below set forth the company's consolidated oil and natural gas price and basis swaps and collars for the third and fourth quarters of 2012 and the years 2012 through 2015 as of July 31, 2012 and include contracts that have been novated to or the benefits of which have been conveyed to SandRidge sponsored royalty trusts.

    Quarter Ending

    9/30/2012

    12/31/2012

    Oil:

    Swap Volume (MMBbls)

    4.05

    4.20

    Swap

    $100.52

    $100.67

    Collar Volume (MMBbls)

    0.06

    0.05

    Collar:  High

    $114.00

    $114.00

    Collar:  Low

    $85.00

    $85.00

    LLS Basis Volume (MMBbls)

    0.38

    0.37

    Swap

    $17.48

    $17.49

    Natural Gas:

    Swap Volume (Bcf)

    20.85

    22.05

    Swap

    $2.81

    $3.14

    Collar Volume (Bcf)

    2.16

    2.27

    Collar:  High

    $6.58

    $6.58

    Collar:  Low

    $4.04

    $4.09

    Year Ending

    12/31/2012

    12/31/2013

    12/31/2014

    12/31/2015

    Oil:

    Swap Volume (MMBbls)

    15.02

    18.52

    6.78

    5.08

    Swap

    $100.22

    $96.24

    $92.15

    $83.69

    Collar Volume (MMBbls)

    0.17

    0.17

    -

    -

    Collar:  High

    $114.00

    $102.50

    -

    -

    Collar:  Low

    $85.00

    $80.00

    -

    -

    Three-way Collar Volume (MMBbls)

    -

    -

    6.57

    -

    Call Price 

    -

    -

    $100.00

    -

    Put Price 

    -

    -

    $90.05

    -

    Short Put Price 

    -

    -

    $70.00

    -

    LLS Basis Volume (MMBbls)

    1.50

    -

    -

    -

    Swap

    $17.27

    -

    -

    -

    Natural Gas:

    Swap Volume (Bcf)

    52.95

    13.50

    -

    -

    Swap

    $3.10

    $3.51

    -

    -

    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

    Balance Sheet

    The company's capital structure at June 30, 2012 and December 31, 2011 is presented below:

    June 30,

    December 31,

    2012

    2011

    (in thousands)

    Cash and cash equivalents

    $           421,073

    $           207,681

    Current maturities of long-term debt

    $                         -

    $                1,051

    Long-term debt (net of current maturities)

    Senior credit facility

    -

    -

    Mortgage

    -

    14,978

    Senior Notes

    Senior Floating Rate Notes due 2014

    350,000

    350,000

    9.875% Senior Notes due 2016, net

    355,591

    354,579

    8.0% Senior Notes due 2018

    750,000

    750,000

    8.75% Senior Notes due 2020, net

    443,841

    443,568

    7.5% Senior Notes due 2021

    900,000

    900,000

    8.125% Senior Notes due 2022

    750,000

    -

      Total debt 

    3,549,432

    2,814,176

    Stockholders' equity

    Preferred stock

    8

    8

    Common stock

    475

    399

    Additional paid-in capital

    5,202,119

    4,568,856

    Treasury stock, at cost

    (6,925)

    (6,158)

    Accumulated deficit

    (2,360,172)

    (2,937,094)

    Total SandRidge Energy, Inc. stockholders' equity

    2,835,505

    1,626,011

    Noncontrolling interest

    1,586,573

    922,939

    Total capitalization

    $        7,971,510

    $        5,363,126

    During the second quarter of 2012, the company's debt, net of cash balances, increased by approximately $522 million primarily as a result of the issuance of $750 million of senior notes to fund the cash portion of the Dynamic acquisition. On July 31, 2012, the company had no amount drawn under its $1.0 billion senior credit facility and approximately $300 million of cash, leaving approximately $1.3 billion of available liquidity. The company was in compliance with all applicable covenants contained in its debt agreements during the six months ended June 30, 2012 and through and as of the date of this release.

    Operational Guidance

    The company is updating certain 2012 guidance provided on May 3, 2012.

     Year Ending December 31, 2012

    Previous Projection as of

    Updated Projection as of

    May 3, 2012

    August 2, 2012

    Production

    Oil (MMBbls)  (1)

    18.2

    18.2

    Natural Gas (Bcf)

    84.8

    88.8

    Total (MMBoe)

    32.3

    33.0

    Differentials

    Oil  (1)

    $9.00

    $9.00

    Natural Gas

    0.50

    0.50

    Costs per Boe

    Lifting 

    $16.10 - $17.80

    $15.00 - $17.00

    Production Taxes

    1.75 - 1.95

    1.75 - 1.95

    DD&A - oil & gas

    15.90 - 17.65

    16.50 - 18.25

    DD&A - other

    1.75 - 1.95

    1.75 - 1.95

    Total DD&A

    $17.65 - $19.60

    $18.25 - $20.20

    G&A - cash

    4.30 - 4.75

    4.70 - 5.20

    G&A - stock

    1.15 - 1.30

    1.15 - 1.30

    Total G&A

    $5.45 - $6.05

    $5.85 - $6.50

    Interest Expense

    $8.70 - $9.60

    $8.70 - $9.60

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

    $43.5

    $50.0

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

    $142.6

    $134.2

    P&A Cash Cost ($ in millions)

    $35.2

    $60.0

    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

    $1,700

    Land and Seismic

    145

    200

    Total Exploration and Production

    $1,695

    $1,900

    Oil Field Services

    20

    30

    Midstream and Other

    135

    170

    Total Capital Expenditures, Excluding Acquisitions

    $1,850

    $2,100

    (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.

    2012 Guidance Update: The production guidance increase reflects current year acquisitions, divestitures, and better than expected performance from the company's core assets. Lifting cost projections have decreased due to improved efficiencies throughout the company's core operations and the delay of costs relating to CO2 delivery obligations at the Century Plant. DD&A – oil and gas projections have increased primarily as a result of changes in the company's depletion rate as a result of the Dynamic acquisition and the sale of the company's Tertiary assets. G&A – cash projections have increased to include transaction costs associated with acquisition and divestiture activity and the Mississippian Trust II initial public offering. The projection for EBITDA from oilfield services, midstream and other increased to reflect improved drilling profit margins and higher third party working interests. Projected P&A cash costs increased due to accelerated P&A activity on offshore properties. Capital expenditures projections increased to $2.1 billion from $1.85 billion primarily due to accelerated infrastructure activity resulting from drilling success in the Mississippian play.

    Non-GAAP Financial Measures

    Operating cash flow, adjusted EBITDA, adjusted net income available (loss applicable) to common stockholders and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.

    The company defines 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 income (loss) before income tax benefit, interest expense and depreciation, depletion, amortization and accretion of asset retirement obligation. Adjusted EBITDA, as presented herein, is EBITDA excluding interest income, realized gains on early settlements of derivative contracts, non-cash realized losses on amended derivative contracts, non-cash realized losses on financing derivatives, loss (gain) on sale of assets, transaction costs, bargain purchase gain, loss on extinguishment of debt and other various non-cash items (including non-cash portion of noncontrolling interest, stock-based compensation, unrealized (gains) losses on derivative contracts, provision for doubtful accounts and inventory obsolescence).

    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 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, 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 available (loss applicable) to common stockholders, which excludes unrealized (gains) losses on derivative contracts, realized gains on early settlements of derivative contracts, bargain purchase gain, tax benefit resulting from acquisition, financing commitment fees, non-cash realized losses on financing derivatives, transaction costs, loss on extinguishment of debt, non-cash realized losses on amended derivative contracts and loss (gain) on sale of assets from income available (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 available (loss applicable) to common stockholders is not a measure of financial performance under GAAP and should not be considered a substitute for income available (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 unrealized gains attributable to third party ownership in less than wholly-owned consolidated subsidiaries from net income 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 (loss applicable) to common stockholders and adjusted net income attributable to noncontrolling interest.

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

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands)

    Net cash provided by operating activities

    $ 186,796

    $ 177,880

    $ 417,706

    $ 257,542

    Add (deduct)

    Cash (paid) received on financing derivatives

    (43,678)

    4,124

    (45,312)

    5,438

    Changes in operating assets and liabilities

    78,982

    (46,343)

    1,012

    (23,678)

    Operating cash flow

    $ 222,100

    $ 135,661

    $ 373,406

    $ 239,302

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

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands)

    Net income (loss)

    $ 822,863

    $ 210,016

    $ 604,685

    $ (92,328)

    Adjusted for

    Income tax benefit

    (103,658)

    (7,054)

    (103,587)

    (6,967)

    Interest expense (1)

    71,252

    61,369

    139,673

    122,576

    Depreciation and amortization - other

    15,348

    13,275

    29,860

    26,368

    Depreciation and depletion - oil and natural gas

    139,260

    73,826

    226,326

    145,286

    Accretion of asset retirement obligation

    7,965

    2,360

    10,572

    4,786

    EBITDA

    953,030

    353,792

    907,529

    199,721

    Provision for doubtful accounts

    419

    1,594

    553

    1,596

    Inventory obsolescence

    -

    20

    48

    20

    Interest income

    (438)

    (38)

    (540)

    (43)

    Stock-based compensation

    11,052

    8,881

    21,575

    17,099

    Unrealized (gains) losses on derivative contracts

    (582,975)

    (187,904)

    (455,138)

    79,350

    Realized gains on early settlements of

    derivative contracts

    (57,292)

    (25,825)

    (57,292)

    (35,201)

    Non-cash realized losses on amended derivative contracts

    -

    -

    117,108

    -

    Non-cash realized losses on financing derivatives

    2,467

    404

    3,811

    2,847

    Other non-cash income

    507

    109

    (1,853)

    (51)

    Loss (gain) on sale of assets

    300

    (524)

    3,380

    (725)

    Transaction costs

    11,694

    1,745

    14,595

    3,087

    Bargain purchase gain

    (124,446)

    -

    (124,446)

    -

    Loss on extinguishment of debt

    -

    2,051

    -

    38,232

    Non-cash portion of noncontrolling interest (2)

    54,447

    2,245

    24,853

    2,245

    Adjusted EBITDA

    $ 268,765

    $ 156,550

    $ 454,183

    $ 308,177

    (1)

    Excludes unrealized (gains) losses on interest rate swaps of ($2.2) million and $0.4 million for the three-month periods ended June 30, 2012 and 2011, respectively, and ($3.6) million and ($1.4) million for the six-month periods ended June 30, 2012 and 2011, respectively.

    (2)

    Represents depreciation and depletion, unrealized (gains) losses on commodity derivative contracts and income tax expense attributable to noncontrolling interests.

     

     

    Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands)

    Net cash provided by operating activities

    $ 186,796

    $ 177,880

    $ 417,706

    $ 257,542

    Changes in operating assets and liabilities

    78,982

    (46,343)

    1,012

    (23,678)

    Interest expense (1)

    71,252

    61,369

    139,673

    122,576

    Realized gains on early settlements of non-financing

    derivative contracts

    (31,050)

    (25,825)

    (31,050)

    (35,201)

    Transaction costs

    11,694

    1,745

    14,595

    3,087

    Noncontrolling interest - SDT (2)

    (13,319)

    (11,031)

    (27,241)

    (11,031)

    Noncontrolling interest - SDR (2)

    (12,870)

    -

    (12,870)

    -

    Noncontrolling interest - PER (2)

    (18,404)

    -

    (36,103)

    -

    Noncontrolling interest - Other (2)

    36

    122

    109

    115

    Other non-cash items

    (4,352)

    (1,367)

    (11,648)

    (5,233)

    Adjusted EBITDA

    $ 268,765

    $ 156,550

    $ 454,183

    $ 308,177

    (1)

    Excludes unrealized (gains) losses on interest rate swaps of ($2.2) million and $0.4 million for the three-month periods ended June 30, 2012 and 2011, respectively, and ($3.6) million and ($1.4) million for the six-month periods ended June 30, 2012 and 2011, respectively.

    (2)

    Excludes depreciation and depletion, unrealized (gains) losses on commodity derivative contracts and income tax expense attributable to noncontrolling interests.

     

     

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

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands, except per share data)

    Income available (loss applicable) to common stockholders

    $ 808,982

    $ 196,135

    $ 576,922

    $ (120,149)

    Tax benefit resulting from acquisition

    (103,328)

    (6,986)

    (103,328)

    (6,986)

    Unrealized (gains) losses on derivative contracts (1)

    (515,144)

    (182,374)

    (409,327)

    84,880

    Realized gains on early settlements of

    derivative contracts

    (57,292)

    (25,825)

    (57,292)

    (35,201)

    Non-cash realized losses on amended derivative contracts

    -

    -

    117,108

    -

    Non-cash realized losses on financing derivatives

    2,467

    404

    3,811

    2,847

    Loss (gain) on sale of assets

    300

    (524)

    3,380

    (725)

    Transaction costs

    11,694

    1,745

    14,595

    3,087

    Financing commitment fees

    -

    -

    10,875

    -

    Bargain purchase gain

    (124,446)

    -

    (124,446)

    -

    Loss on extinguishment of debt

    -

    2,051

    -

    38,232

    Other non-cash income

    -

    -

    (1,785)

    -

    Effect of income taxes

    (275)

    (64)

    (191)

    21

    Adjusted net income available (loss applicable) to common

    stockholders

    22,958

    (15,438)

    30,322

    (33,994)

    Preferred stock dividends

    13,881

    13,881

    27,763

    27,821

    Total adjusted net income (loss)

    $ 36,839

    $ (1,557)

    $ 58,085

    $ (6,173)

    Weighted average number of common shares outstanding

    Basic

    461,008

    398,435

    430,802

    398,343

    Diluted (2)

    560,640

    495,982

    530,378

    495,781

    Total adjusted net income (loss)

    Per share - basic

    $ 0.05

    $ (0.04)

    $ 0.07

    $ (0.09)

    Per share - diluted

    $ 0.07

    $ (0.00)

    $ 0.11

    $ (0.01)

    (1)

    Excludes unrealized (gains) losses on commodity derivative contracts 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 Income Attributable to Noncontrolling Interest to Adjusted Net Income Attributable to Noncontrolling Interest

    Three Months Ended June 30,

    Six Months Ended June 30,

    2012

    2011

    2012

    2011

    (in thousands, except per share data)

    Net income attributable to noncontrolling interest

    $ 99,004

    $ 13,154

    $ 100,958

    $ 13,160

    Unrealized gain on commodity derivative contracts

    (67,830)

    (5,530)

    (45,811)

    (5,530)

    Adjusted net income attributable to noncontrolling interest

    $ 31,174

    $ 7,624

    $ 55,147

    $ 7,630

     

    Conference Call Information

    The company will host a conference call to discuss these results on Friday, August 3, 2012 at 8:00 am CDT. The telephone number to access the conference call from within the U.S. is 888-396-2298 and from outside the U.S. is 617-847-8708. The pass code for the call is 58387571. An audio replay of the call will be available from August 3, 2012 until 11:59 pm CDT on September 3, 2012. The number to access the conference call replay from within the U.S. is 888-286-8010 and from outside the U.S. is +1-617-801-6888. The pass code for the replay is 45788862.

    A live audio webcast of the conference call also will 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:

    • August 6, 2012Tuohy Brothers 2012 Energy Conference; New York, NY
    • August 8, 2012 – TPH 2012 Hotter 'N Hell Energy Conference; Houston, TX
    • August 14, 2012 – Enercom's The Oil & Gas Conference®; Denver, CO
    • August 30, 2012 – Hodges Capital Investment Forum; Dallas, TX
    • September 5, 2012 – Barclays' 2012 CEO Energy-Power Conference; New York, NY
    • September 13, 2012 – Barclays' European High Yield & Leveraged Finance Conference; London, UK
    • October 2, 2012Johnson Rice & Co. 2012 Energy Conference; New Orleans, LA
    • October 4, 2012 – Credit Suisse 2012 Global Credit Products Conference; Miami, FL

    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.

    Third Quarter 2012 Earnings Release and Conference Call

    November 8, 2012 (Thursday) – Earnings press release after market close November 9, 2012 (Friday) – Earnings conference call at 8:00 am CST

     

    SandRidge Energy, Inc. and Subsidiaries

    Condensed Consolidated Statements of Operations

    (in thousands, except per share data)

    Three Months Ended

    Six Months Ended

    June 30,

    June 30,

    2012

    2011

    2012

    2011

    (Unaudited)

    Revenues

    Oil and natural gas

    $     429,758

    $     312,111

    $ 771,123

    $ 579,053

    Drilling and services

    33,632

    28,537

    62,941

    49,571

    Midstream and marketing

    8,852

    16,313

    17,158

    38,570

    Other

    6,192

    7,813

    8,847

    10,427

    Total revenues

    478,434

    364,774

    860,069

    677,621

    Expenses

    Production

    122,481

    81,834

    205,791

    155,791

    Production taxes

    11,001

    12,666

    23,255

    23,242

    Drilling and services

    19,241

    18,058

    36,802

    33,099

    Midstream and marketing

    8,559

    15,873

    16,513

    38,156

    Depreciation and depletion - oil and natural gas

    139,260

    73,826

    226,326

    145,286

    Depreciation and amortization - other

    15,348

    13,275

    29,860

    26,368

    Accretion of asset retirement obligation

    7,965

    2,360

    10,572

    4,786

    General and administrative

    61,716

    37,678

    112,017

    72,091

    (Gain) loss on derivative contracts

    (669,850)

    (169,988)

    (415,204)

    107,640

    Loss (gain) on sale of assets

    300

    (524)

    3,380

    (725)

    Total expenses

    (283,979)

    85,058

    249,312

    605,734

     Income from operations

    762,413

    279,716

    610,757

    71,887

    Other income (expense)

    Interest expense

    (68,569)

    (61,687)

    (135,534)

    (121,124)

    Bargain purchase gain

    124,446

    -

    124,446

    -

    Loss on extinguishment of debt

    -

    (2,051)

    -

    (38,232)

    Other (expense) income, net

    (81)

    138

    2,387

    1,335

    Total other income (expense)

    55,796

    (63,600)

    (8,701)

    (158,021)

    Income (loss) before income taxes

    818,209

    216,116

    602,056

    (86,134)

    Income tax benefit

    (103,658)

    (7,054)

    (103,587)

    (6,967)

    Net income (loss) 

    921,867

    223,170

    705,643

    (79,167)

    Less: net income attributable to noncontrolling interest

    99,004

    13,154

    100,958

    13,161

    Net income (loss) attributable to SandRidge Energy, Inc.

    822,863

    210,016

    604,685

    (92,328)

    Preferred stock dividends 

    13,881

    13,881

    27,763

    27,821

    Income available (loss applicable) to SandRidge Energy, Inc. 

    common stockholders

    $     808,982

    $     196,135

    $ 576,922

    $(120,149)

    Earnings (loss) per share

    Basic

    $          1.75

    $          0.49

    $      1.34

    $     (0.30)

    Diluted

    $          1.47

    $          0.42

    $      1.14

    $     (0.30)

    Weighted average number of common shares outstanding

    Basic

    461,008

    398,435

    430,802

    398,343

    Diluted

    560,640

    495,982

    530,378

    398,343

     

     

    SandRidge Energy, Inc. and Subsidiaries

    Condensed Consolidated Balance Sheets

    (in thousands, except per share data)

    June 30,

    December 31,

    2012

    2011

    (Unaudited)

    ASSETS

    Current assets

    Cash and cash equivalents

    $ 421,073

    $ 207,681

    Accounts receivable, net

    288,332

    206,336

    Derivative contracts

    204,202

    4,066

    Inventories

    4,055

    6,903

    Costs in excess of billings

    14,768

    -

    Prepaid expenses

    33,648

    14,099

    Other current assets

    14,707

    2,755

    Total current assets

    980,785

    441,840

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

    Proved

    11,197,054

    8,969,296

    Unproved

    948,369

    689,393

    Less: accumulated depreciation, depletion and impairment

    (5,011,661)

    (4,791,534)

    7,133,762

    4,867,155

    Other property, plant and equipment, net

    595,250

    522,269

    Restricted deposits

    27,941

    27,912

    Derivative contracts

    98,237

    26,415

    Goodwill

    235,396

    235,396

    Other assets

    107,164

    98,622

    Total assets

    $ 9,178,535

    $ 6,219,609

    LIABILITIES AND EQUITY

    Current liabilities

    Current maturities of long-term debt

    $ -

    $ 1,051

    Accounts payable and accrued expenses

    669,362

    506,784

    Billings and estimated contract loss in excess of costs incurred

    6,321

    43,320

    Derivative contracts

    6,962

    115,435

    Asset retirement obligation

    140,789

    32,906

    Total current liabilities

    823,434

    699,496

    Long-term debt

    3,549,432

    2,813,125

    Derivative contracts

    19,833

    49,695

    Asset retirement obligation

    349,192

    95,210

    Other long-term obligations

    14,566

    13,133

    Total liabilities

    4,756,457

    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 June 30, 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 June 30, 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 June 30, 2012 and December 31, 2011; aggregate liquidation preference of

    $300,000

    3

    3

    Common stock, $0.001 par value, 800,000 shares authorized; 490,161 issued and

    489,191 outstanding at June 30, 2012 and 412,827 issued and 411,953 outstanding at December 31, 2011

    475

    399

    Additional paid-in capital

    5,202,119

    4,568,856

    Treasury stock, at cost

    (6,925)

    (6,158)

    Accumulated deficit

    (2,360,172)

    (2,937,094)

    Total SandRidge Energy, Inc. stockholders' equity

    2,835,505

    1,626,011

    Noncontrolling interest

    1,586,573

    922,939

    Total equity

    4,422,078

    2,548,950

    Total liabilities and equity

    $ 9,178,535

    $ 6,219,609

     

     

    SandRidge Energy, Inc. and Subsidiaries

    Condensed Consolidated Statements of Cash Flows

    (in thousands)

    Six Months Ended

    June 30,

    2012

    2011

    (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES

    Net income (loss)

    $ 705,643

    $ (79,167)

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

    Depreciation, depletion and amortization

    256,186

    171,654

    Accretion of asset retirement obligation

    10,572

    4,786

    Debt issuance costs amortization

    5,401

    5,748

    Discount amortization on long-term debt

    1,285

    1,162

    Bargain purchase gain

    (124,446)

    -

    Loss on extinguishment of debt

    -

    38,232

    Deferred income taxes

    (103,328)

    (6,986)

    Unrealized (gain) loss on derivative contracts

    (455,138)

    79,350

    Realized loss on amended derivative contracts

    117,108

    -

    Realized (gain) loss on financing derivatives

    (21,125)

    1,576

    Loss (gain) on sale of assets

    3,380

    (725)

    Investment income

    (97)

    (67)

    Stock-based compensation

    23,277

    18,301

    Changes in operating assets and liabilities

    (1,012)

    23,678

    Net cash provided by operating activities

    417,706

    257,542

    CASH FLOWS FROM INVESTING ACTIVITIES

    Capital expenditures for property, plant and equipment

    (1,123,040)

    (857,714)

    Acquisitions, net of cash received

    (761,575)

    (9,149)

    Proceeds from sale of assets

    420,859

    369,251

    Net cash used in investing activities

    (1,463,756)

    (497,612)

    CASH FLOWS FROM FINANCING ACTIVITIES

    Proceeds from borrowings

    750,000

    1,725,000

    Repayments of borrowings

    (16,029)

    (1,741,795)

    Premium on debt redemption

    -

    (30,338)

    Debt issuance costs

    (27,316)

    (19,640)

    Proceeds from issuance of royalty trust units

    587,086

    336,892

    Proceeds from the sale of royalty trust units

    123,549

    -

    Distributions to royalty trust unitholders

    (76,801)

    -

    Noncontrolling interest distributions

    -

    (1,501)

    Stock issuance expense

    -

    (231)

    Stock-based compensation excess tax benefit

    8

    7

    Purchase of treasury stock

    (7,980)

    (6,030)

    Dividends paid - preferred

    (27,763)

    (28,980)

    Cash (paid) received on settlement of financing derivatives

    (45,312)

    5,438

    Net cash provided by financing activities

    1,259,442

    238,822

    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

    213,392

    (1,248)

    CASH AND CASH EQUIVALENTS, beginning of year

    207,681

    5,863

    CASH AND CASH EQUIVALENTS, end of period

    $ 421,073

    $ 4,615

    Supplemental Disclosure of Noncash Investing and Financing Activities

    Change in accrued capital expenditures

    $ 8,672

    $ 2,351

    Convertible perpetual preferred stock dividends payable

    $ 16,572

    $ 16,572

    Adjustment to oil and natural gas properties for estimated contract loss

    $ 10,000

    $ 19,000

    Common stock issued in connection with acquisition

    $ 542,138

    $ -

    For further information, please contact:

    Kevin R. White Senior Vice President 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, drilling and recompletion plans, drilling locations, oil and natural gas production, derivative transactions, shares outstanding, pricing differentials, operating costs and capital spending, and tax rates and descriptions of our development plans.  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 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 (a) Part I, Item 1A - "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2011, and (b) comparable "risk factors" sections of our Quarterly Reports on Form 10-Q filed thereafter.  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 CO2 treating and transportation facilities and conduct marketing and tertiary oil recovery 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, Permian Basin, Gulf of Mexico, West Texas Overthrust and Gulf Coast. SandRidge's internet address is www.sandridgeenergy.com.

    SOURCE SandRidge Energy, Inc.



RELATED LINKS

http://www.sandridgeenergy.com