SandRidge Energy, Inc. Reports Financial and Operational Results for the First Quarter of 2013

Company Management in Conjunction With Expanded Board of Directors Reviews Company's Strategy, Assets and Investment and Spending Plans

Mississippian Quarterly Production Grew to 39.5 MBoe per Day (46% Oil), a 10% Increase from the Previous Period and a 105% Increase over the First Quarter of 2012

Brought on 109 Mississippian Wells with an Average 30-day IP of 330 Boe per Day during the First Quarter

Issues Revised 2013 Guidance, a 33% Reduction in Capital Expenditures from 2012

- Estimated Total Production of 32.7 MMBoe

- Estimated Mississippian Production of 16.2 MMBoe, 60% Growth

- Planned Capital Expenditures of $1.45 Billion, $700 Million Decrease from 2012

07 May, 2013, 16:05 ET from SandRidge Energy, Inc.

OKLAHOMA CITY, May 7, 2013 /PRNewswire/ -- SandRidge Energy, Inc. (NYSE: SD) today announced financial and operational results for the quarter ended March 31, 2013.

Strategic Direction

Over the last two months the SandRidge management team and Board of Directors have been reviewing and analyzing the company's strategy, assets and spending levels. This effort has resulted in notable changes to the 2013 business plan, including an increasing focus on capital discipline, creating sustainable returns and lowering risk levels. The company's development plans for its assets, primarily the Mississippian Play, are being concentrated in its most proven acreage, near existing infrastructure, with a higher proportion of capital directed toward drilling producing wells. This focus on capital efficiency has resulted in a reduction in the capital investment budget for 2013 and an extension of the company's liquidity, all while the company continues to unlock value in its assets and generate meaningful production growth. Additionally management and the Board have undertaken overhead cost saving initiatives and reductions, the impact of which the company expects to begin realizing in the last half of 2013.

Key Financial Results

  • Adjusted EBITDA of $270 million for first quarter 2013 compared to $185 million in first quarter 2012.
  • Operating cash flow of $182 million for first quarter 2013 compared to $151 million in first quarter 2012.
  • Net loss applicable to common stockholders of $493 million, or $1.03 per diluted share, for first quarter 2013 compared to net loss applicable to common stockholders of $232 million, or $0.58 per diluted share, in first quarter 2012.
  • Adjusted net income of $2.0 million, or $0.00 per diluted share, for first quarter 2013 compared to adjusted net income of $21.2 million, or $0.04 per diluted share, in first quarter 2012.

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

  • Maintained industry leading Mississippian well cost of $3.1 million during the first quarter
  • Completed three Mississippian wells with 30-day IPs over 1,000 Boe per day in the first quarter
  • Stacked pay testing program yields early success in three Oklahoma counties:  
    • Four successful horizontal tests in the following zones: Chester Sandstone, Middle and Lower Mississippian intervals
    • Initial production from the four wells exceeded the company's Mississippian type curve with an average 30-day IP of 462 Boe per day (201 Bopd)
  • Gulf of Mexico and Gulf Coast production averaged 32.4 MBoe per day during the first quarter
  • Ended the first quarter with approximately $2.1 billion of liquidity and a leverage ratio of 2.26x
  • Redeemed approximately $1.1 billion of senior notes resulting in a yearly interest expense reduction of approximately $100 million
  • Hedged production through the remainder of 2013:  
    • 86% (9.5 MMBbls) of estimated oil production hedged at $99 per barrel
    • 56% (43 Bcf) of estimated natural gas production hedged at $4.10 per MMBtu

Drilling and Operational Activities

SandRidge averaged 38 rigs operating during the first quarter of 2013 and drilled 179 wells. A total of 169 operated wells were completed and brought on production during the first quarter of 2013.

Mississippian Play. During the first quarter of 2013, SandRidge drilled 122 horizontal wells: 91 in Oklahoma and 31 in Kansas. SandRidge also drilled seven disposal wells during the quarter. The company exited the quarter with 32 horizontal rigs operating in the play: 23 drilling wells in Oklahoma and nine drilling wells in Kansas. Additionally, the company had two rigs drilling disposal wells. The company's Mississippian assets produced 39.5 MBoe per day during the first quarter (46% oil).

With the revised capital expenditure plan, the company expects to average 25 horizontal rigs and drill approximately 425 horizontal wells in 2013. As a result of the reduced rig count and further optimization of its salt water disposal system, the company now expects to drill 44 disposal wells in 2013. Compared to the previous year, the revised capital budget yields a 27% decrease in disposal wells while growing the horizontal well count by 7%.

Gulf of Mexico / Gulf Coast. During the first quarter of 2013, SandRidge drilled and completed one well. The company also participated in the drilling of one non-operated well and had four wells in progress at the end of the quarter.  Additionally, SandRidge performed five recompletions and participated in four non-operated recompletions during the quarter. The company's Gulf of Mexico and Gulf Coast assets produced 32.4 MBoe per day during the first quarter (46% oil).

Permian Basin. On February 26, 2013, the company closed the sale of its Permian Basin assets other than those associated with SandRidge Permian Trust. The divested assets produced approximately 1.15 MMBoe net during the first quarter before the close of the sale. In the company's retained Permian properties, 55 wells were drilled during the first quarter of 2013. SandRidge plans to utilize three rigs and expects to drill approximately 220 wells in 2013, all for SandRidge Permian Trust. The company's retained Permian Basin assets produced 5.6 MBoe per day during the first quarter (95% oil).

Other Operating Areas. During the first quarter, SandRidge's legacy West Texas properties produced approximately 7.6 MBoe per day (99% natural gas). Additionally, its legacy Mid-Continent assets produced 2.2 MBoe per day in the first quarter (80% natural gas).

Additional 2013 Guidance detail is available on the company's website, www.sandridgeenergy.com, under Investor Relations/Guidance.

Operational and Financial Statistics

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

Three Months Ended March 31,

2013

2012

Production

Oil (MBbl) (1)

4,442

3,427

Natural gas (MMcf)

27,321

15,746

Oil equivalent (MBoe)

8,995

6,051

Daily production (MBoed)

99.9

66.5

Average price per unit

Realized oil price per barrel - as reported (1)

$ 87.88

$ 89.99

Realized impact of derivatives per barrel (1)

3.15

(3.72)

Net realized price per barrel (1)

$ 91.03

$ 86.27

Realized natural gas price per Mcf - as reported

$ 3.21

$ 2.10

Realized impact of derivatives per Mcf

(0.02)

0.25

Net realized price per Mcf

$ 3.19

$ 2.35

Realized price per Boe - as reported

$ 53.14

$ 56.42

Net realized price per Boe - including impact of derivatives

$ 54.65

$ 54.96

Average cost per Boe

Lease operating

$ 14.73

$ 13.77

Production taxes

1.05

2.03

General and administrative

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

6.63

6.43

Stock-based compensation (3)

2.21

1.88

Depletion (4)

18.60

14.82

Lease operating cost per Boe

Mississippian

$ 9.18

$ 9.59

Permian Basin

13.68

13.16

Offshore

20.99

32.55

Earnings per share

Loss per share applicable to common stockholders

Basic

$ (1.03)

$ (0.58)

Diluted

(1.03)

(0.58)

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

Basic

$ (0.02)

$ 0.02

Diluted

0.00

0.04

Weighted average number of common shares outstanding (in thousands)

Basic

477,826

400,597

Diluted (5)

569,126

500,116

(1)

Includes NGLs.

(2)

Includes transaction costs, legal settlements, severance and consent solicitation costs totaling $18.0 million and $2.9 million for the three-month periods ended March 31, 2013 and 2012, respectively.

(3)

Three-month period ended March 31, 2013 includes $7.6 million for the acceleration of certain stock awards.

(4)

Includes accretion of asset retirement obligation.

(5)

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

 

Discussion of First Quarter 2013 Financial Results

Oil and natural gas revenue increased 40% to $478 million in the first quarter of 2013 from $341 million in the same period of 2012 as a result of increases in oil and natural gas production. Oil production increased 30% to 4.4 MMBbls from first quarter 2012 production of 3.4 MMBbls and natural gas production increased 74% to 27.3 Bcf from first quarter 2012 production of 15.7 Bcf. Production increases were attributable to continued development of the company's properties in the Mississippian play and production contributed by properties acquired in the second quarter of 2012. The production increase was partly offset by lower quarterly production from the company's Permian properties resulting from the Permian divestiture that closed in the first quarter of 2013. Realized reported prices, which exclude the impact of derivative settlements, were $87.88 per barrel and $3.21 per Mcf during the first quarter of 2013. Realized reported prices in the same period of 2012 were $89.99 per barrel and $2.10 per Mcf.

First quarter 2013 production expense was $14.73 per Boe compared to first quarter 2012 production expense of $13.77 per Boe. The increase was primarily due to additional costs related to offshore properties acquired during the second quarter of 2012 as higher cost-per-unit offshore production volumes comprised a larger percentage of total production during the 2013 period. In SandRidge's primary onshore operations, production expense continued to decrease as a result of improving efficiencies. In the company's Mississippian play, first quarter production expense decreased 4% year-over-year from $9.59 to $9.18 per Boe.

Depletion per unit in the first quarter of 2013 was $18.60 per Boe compared to $14.82 per Boe in the same period of 2012. The increase in rate per unit primarily resulted from the addition of offshore properties acquired during the second quarter of 2012 to the company's depletable asset base.

Capital Expenditures

The table below summarizes the company's capital expenditures for the quarters ended March 31, 2013 and 2012:

Three Months Ended March 31,

2013

2012

(in thousands)

Drilling and production

Mid-Continent

$234,326

$219,451

Permian Basin

60,895

162,319

Gulf of Mexico/Gulf Coast

52,077

1,827

WTO/Tertiary/Other

-

11,030

347,298

394,627

Leasehold and seismic

Mid-Continent

11,260

87,739

Permian Basin

360

2,956

Gulf of Mexico/Gulf Coast 

720

43

WTO/Tertiary/Other

868

1,820

13,208

92,558

Inventory

(2,966)

4,649

Total exploration and development

357,540

491,834

Drilling and oil field services

632

7,916

Midstream

15,221

23,975

Other - general 

15,319

45,933

Total capital expenditures, excluding acquisitions

388,712

569,658

Acquisitions

5,048

10,511

Total capital expenditures

$393,760

$580,169

Plugging and abandonment

$  40,114

$    3,421

 

Derivative Contracts

The tables below set forth the company's consolidated oil and natural gas price and basis swaps and collars for the years 2013 through 2015 as of May 1, 2013 and include contracts that have been novated to, or the benefits of which have been conveyed to, SandRidge sponsored royalty trusts.

Quarter Ending

6/30/2013

9/30/2013

12/31/2013

Oil (MMBbls):

Swap Volume

3.27

3.12

3.10

Swap

$99.26

$99.27

$99.11

Collar Volume

0.04

0.04

0.04

Collar:  High

$102.50

$102.50

$102.50

Collar:  Low

$80.00

$80.00

$80.00

LLS Basis Volume

0.27

-

-

Swap

$12.51

-

-

Natural Gas (Bcf):

Swap Volume

14.13

16.10

12.42

Swap

$4.08

$4.10

$4.11

Collar Volume

1.71

1.72

1.72

Collar:  High

$6.71

$6.71

$6.71

Collar:  Low

$3.78

$3.78

$3.78

Year Ending

12/31/2013

12/31/2014

12/31/2015

Oil (MMBbls):

Swap Volume

14.01

7.51

5.08

Swap

$98.68

$92.43

$83.69

Collar Volume

0.17

-

-

Collar:  High

$102.50

-

-

Collar:  Low

$80.00

-

-

Three-way Collar Volume

-

8.21

2.92

Call Price 

-

$100.00

$103.13

Put Price 

-

$90.20

$90.82

Short Put Price 

-

$70.00

$73.13

LLS Basis Volume

0.54

-

-

Swap

$13.83

-

-

Natural Gas (Bcf):

Swap Volume

42.65

-

-

Swap

$4.10

-

-

Collar Volume

6.86

0.94

1.01

Collar:  High

$6.71

$7.78

$8.55

Collar:  Low

$3.78

$4.00

$4.00

 

Balance Sheet

The company's capital structure at March 31, 2013 and December 31, 2012 is presented below:

March 31, 

December 31,

2013

2012

(in thousands)

Cash and cash equivalents

$        1,308,733

$      309,766

Current maturities of long-term debt

$                   -

$              -

Long-term debt (net of current maturities)

Senior credit facility

-

-

Senior Notes

9.875% Senior Notes due 2016, net

-

356,657

8.0% Senior Notes due 2018

-

750,000

8.75% Senior Notes due 2020, net

444,275

444,127

7.5% Senior Notes due 2021

1,179,230

1,179,328

8.125% Senior Notes due 2022

750,000

750,000

7.5% Senior Notes due 2023, net

821,038

820,971

  Total debt 

3,194,543

4,301,083

Stockholders' equity

Preferred stock

8

8

Common stock

479

476

Additional paid-in capital

5,237,821

5,228,019

Treasury stock, at cost

(8,974)

(8,602)

Accumulated deficit

(3,344,269)

(2,851,048)

Total SandRidge Energy, Inc. stockholders' equity

1,885,065

2,368,853

Noncontrolling interest

1,390,427

1,493,602

Total capitalization

$        6,470,035

$   8,163,538

 

During the first quarter of 2013, the company's debt, net of cash balances, decreased by approximately $2.1 billion as a result of closing the Permian sale, redeeming $1.1 billion of senior notes, and funding the company's drilling program. On May 1, 2013, the company had no amount drawn under its $775 million senior credit facility and approximately $1.26 billion of cash, leaving approximately $2 billion of available liquidity. The company was in compliance with all applicable covenants contained in its debt agreements during the three months ended March 31, 2013 and through and as of the date of this release.

2013 Operational Guidance: The company is updating its guidance for 2013.

Year Ending December 31, 2013

Projection as of

Projection as of

February 28, 2013

May 7, 2013

Production

Oil (MMBbls)  (1)

15.9

15.5

Natural Gas (Bcf)

110.4

103.2

Total (MMBoe)

34.3

32.7

Differentials

Oil  (1)

$8.50

$8.50

Natural Gas

0.45

0.45

Costs per Boe

Lifting 

$14.50 - $16.50

$14.50 - $16.50

Production Taxes

1.00 - 1.20

1.00 - 1.20

DD&A - oil & gas

16.50 - 18.30

17.10 - 18.90

DD&A - other

1.80 - 2.00

2.00 - 2.20

Total DD&A

$18.30 - $20.30

$19.10 - $21.10

G&A - cash

4.00 - 4.45

4.10 - 4.55

G&A - stock

1.35 - 1.50

1.10 - 1.25

Total G&A

$5.35 - $5.95

$5.20 - $5.80

Interest Expense

$8.10 - $9.10

$8.30 - $9.30

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

$30

$20

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

$150

$140

P&A Cash Cost ($ in millions)

$120

$120

Corporate Tax Rate (4)

0%

0%

Deferral Rate

0%

0%

Shares Outstanding at End of Period (in millions)

Common Stock

498

498

Preferred Stock (as converted)

90

90

Fully Diluted

588

588

Capital Expenditures ($ in millions)

Exploration and Production

$1,450

$1,230

Land and Seismic

100

100

Total Exploration and Production

$1,550

$1,330

Oil Field Services

30

15

Midstream and Other

170

105

Total Capital Expenditures (excluding acquisitions)

$1,750

$1,450

(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.

(4)

As a result of the Permian divestiture, the company expects to incur cash income taxes of approximately $5 million in 2013 with a corresponding expense included in Net Income.

 

2013 Guidance Update:  The updated guidance gives effect to the revised capital expenditure plan. SandRidge estimates production of approximately 32.7 MMBoe and capital expenditures of $1.45 billion in 2013. A majority of SandRidge's planned capital expenditures will fund its Mississippian program, where the company plans to drill approximately 425 horizontal producers and 44 disposal wells in 2013. The remaining 2013 drilling capital will be used in the company's offshore properties and to drill approximately 220 wells associated with the SandRidge Permian Trust development program. The G&A guidance presented for 2013 excludes one-time items. The company has implemented initiatives to reduce G&A expenses, targeting an annual run-rate of $150 million by the fourth quarter of 2013. Additional 2013 Guidance detail is available on the company's website, www.sandridgeenergy.com, under Investor Relations/Guidance.

Non-GAAP Financial Measures

Operating cash flow, adjusted EBITDA, adjusted net (loss applicable) income available 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 received (paid) on financing derivatives. It defines EBITDA as net (loss) income before income tax expense, interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding interest income, realized losses on early settlements of derivative contracts, non-cash realized losses on amended derivative contracts, non-cash realized (gains) losses on financing derivative contracts, loss on sale of assets, transaction costs, legal settlements, consent solicitation fees, severance, loss on extinguishment of debt and other various non-cash items (including non-cash portion of noncontrolling interest, stock-based compensation and unrealized losses on derivative contracts).

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 (loss applicable) income available to common stockholders, which excludes unrealized losses on derivative contracts, realized losses on early settlements of derivative contracts, tax expense resulting from divestiture, financing commitment fees, non-cash realized (gains) losses on financing derivative contracts, transaction costs, legal settlements, consent solicitation fees, loss on extinguishment of debt, non-cash realized losses on amended derivative contracts, severance and loss on sale of assets from loss applicable to common stockholders. Management uses this financial measure as an indicator of the company's operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net (loss applicable) income available to common stockholders is not a measure of financial performance under GAAP and should not be considered a substitute for loss applicable to common stockholders.

The supplemental measure of adjusted net income attributable to noncontrolling interest is used by the company's management to measure the impact on the company's financial results of the ownership by third parties of interests in the company's less than wholly-owned consolidated subsidiaries. Adjusted net income attributable to noncontrolling interest excludes the portion of unrealized loss on commodity derivative contracts, legal settlements and loss on sale of assets attributable to third party ownership in less than wholly-owned consolidated subsidiaries from net (loss) 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 (loss) 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 (loss applicable) income available 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 March 31,

2013

2012

(in thousands)

Net cash provided by operating activities

$121,457

$230,910

Add (deduct)

Cash received (paid) on financing derivatives

3,208

(1,634)

Changes in operating assets and liabilities

56,921

(77,787)

Operating cash flow

$181,586

$151,489

 

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

Three Months Ended March 31,

2013

2012

(in thousands)

Net loss

$(479,340)

$(218,178)

Adjusted for

Income tax expense

4,429

71

Interest expense (1)

88,834

68,421

Depreciation and amortization - other

15,336

14,513

Depreciation and depletion - oil and natural gas

157,526

87,066

Accretion of asset retirement obligation

9,779

2,607

EBITDA

(203,436)

(45,500)

Interest income

(529)

(102)

Stock-based compensation

11,312

10,523

Unrealized losses on derivative contracts

22,417

127,836

Realized losses on early settlements of derivative contracts - Permian

29,623

-

Non-cash realized losses on amended derivative contracts

-

117,108

Non-cash realized (gains) losses on financing derivative contracts

(40)

1,344

Other non-cash income

(108)

(2,177)

Loss on sale of assets (2)

398,174

3,080

Transaction costs

624

2,901

Legal settlements

1,178

-

Consent solicitation fees

13,463

-

Severance

10,397

-

Loss on extinguishment of debt

82,005

-

Non-cash portion of noncontrolling interest (3)

(95,227)

(29,594)

Adjusted EBITDA

$ 269,853

$ 185,419

(1)

Excludes unrealized gains on interest rate swaps of $2.4 million and $1.4 million for the three-month periods ended March 31, 2013 and 2012.

(2)

Includes loss on sale of Permian oil and natural gas assets of approximately $399.1 million for the three-month period ended March 31, 2013.

(3)

Represents depreciation and depletion, loss on sale of Permian Properties, unrealized losses on commodity derivative contracts, legal settlement and income tax expense attributable to noncontrolling interests.

 

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA

Three Months Ended March 31,

2013

2012

(in thousands)

Net cash provided by operating activities

$121,457

$230,910

Changes in operating assets and liabilities

56,921

(77,787)

Interest expense (1)

88,834

68,421

Realized losses on early settlements of derivative contracts - Permian

29,623

-

Transaction costs

624

2,901

Legal settlements

1,178

-

Consent solicitation fees

13,463

-

Severance

2,781

-

Noncontrolling interest - SDT (2)

(11,303)

(13,922)

Noncontrolling interest - SDR (2)

(16,927)

-

Noncontrolling interest - PER (2)

(15,100)

(17,699)

Noncontrolling interest - Other (2)

22

73

Other non-cash items

(1,720)

(7,478)

Adjusted EBITDA

$269,853

$185,419

(1)

Excludes unrealized gains on interest rate swaps of $2.4 million and $1.4 million for the three-month periods ended March 31, 2013 and 2012.

(2)

Excludes depreciation and depletion, loss on sale of Permian Properties, unrealized losses on commodity derivative contracts, legal settlement and income tax expense attributable to noncontrolling interests.

 

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

Three Months Ended March 31,

2013

2012

(in thousands, except per share data)

Loss applicable to common stockholders

$(493,221)

$(232,059)

Tax expense resulting from divestiture

4,359

-

Unrealized losses on derivative contracts (1)

13,751

105,817

Realized losses on early settlements of

derivative contracts - Permian

29,623

-

Non-cash realized losses on amended derivative contracts

-

117,108

Non-cash realized (gains) losses on financing derivative contracts

(40)

1,344

Loss on sale of assets (1)

326,434

3,080

Transaction costs

624

2,901

Legal settlements (1)

778

-

Consent solicitation fees

13,463

-

Severance

10,397

-

Financing commitment fees

-

10,875

Loss on extinguishment of debt

82,005

-

Other non-cash income

(85)

(1,785)

Effect of income taxes

63

79

Adjusted net (loss applicable) income available to common stockholders

(11,849)

7,360

Preferred stock dividends

13,881

13,881

Total adjusted net income

$     2,032

$   21,241

Weighted average number of common shares outstanding

Basic

477,826

400,597

Diluted (2)

569,126

500,116

Total adjusted net (loss) income

Per share - basic

$     (0.02)

$      0.02

Per share - diluted

$      0.00

$      0.04

(1)

Excludes amounts attributable to noncontrolling interests.

(2)

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

 

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

Three Months Ended March 31,

2013

2012

(in thousands)

Net (loss) income attributable to noncontrolling interest

$(51,919)

$  1,954

Loss on sale of assets - Permian

71,740

-

Legal settlement

400

-

Unrealized loss on commodity derivative contracts

8,666

22,019

Adjusted net income attributable to noncontrolling interest

$ 28,887

$23,973

 

Conference Call Information

The company will host a conference call to discuss these results on Wednesday, May 8, 2013 at 8:00 am CDT. The telephone number to access the conference call from within the U.S. is 800-237-9752 and from outside the U.S. is 617-847-8706. The passcode for the call is 65503814. An audio replay of the call will be available from May 8, 2013 until 11:59 pm CDT on June 7, 2013. The number to access the conference call replay from within the U.S. is 888-286-8010 and from outside the U.S. is 617-801-6888. The passcode for the replay is 81209355.

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:

  • May 13, 2013 – Susquehanna 2013 Energy Conference; NYC, NY
  • May 21, 2013 – Barclays High Yield Bond and Syndicated Loan Conference 2013; Chicago, IL
  • June 3, 2013 – 2013 RBC Capital Markets' Energy and Power Conference; NYC, NY

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

Second Quarter 2013 Earnings Release and Conference Call

August 6, 2013 (Tuesday) – Earnings press release after market close August 7, 2013 (Wednesday) – Earnings conference call at 8:00 am CDT

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended March 31,

2013

2012

(Unaudited)

Revenues

Oil and natural gas

$ 478,017

$ 341,365

Drilling and services

17,370

29,309

Midstream and marketing

13,032

8,306

Other

3,271

2,655

Total revenues

511,690

381,635

Expenses

Production

132,501

83,310

Production taxes

9,439

12,254

Cost of sales

16,317

17,560

Midstream and marketing

11,803

7,954

Depreciation and depletion - oil and natural gas

157,526

87,066

Depreciation and amortization - other

15,336

14,513

Accretion of asset retirement obligations

9,779

2,607

General and administrative

79,444

50,301

Loss on derivative contracts

40,897

254,646

Loss on sale of assets

398,174

3,080

Total expenses

871,216

533,291

Loss from operations

(359,526)

(151,656)

Other income (expense)

Interest expense

(85,910)

(66,965)

Loss on extinguishment of debt

(82,005)

-

Other income, net

611

2,468

Total other expense

(167,304)

(64,497)

Loss before income taxes

(526,830)

(216,153)

Income tax expense

4,429

71

Net loss

(531,259)

(216,224)

Less: net (loss) income attributable to noncontrolling interest

(51,919)

1,954

Net loss attributable to SandRidge Energy, Inc.

(479,340)

(218,178)

Preferred stock dividends 

13,881

13,881

Loss applicable to SandRidge Energy, Inc. common stockholders

$(493,221)

$(232,059)

Loss per share

Basic

$     (1.03)

$     (0.58)

Diluted

$     (1.03)

$     (0.58)

Weighted average number of common shares outstanding

Basic

477,826

400,597

Diluted

477,826

400,597

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

March 31,

December 31,

2013

2012

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$1,308,733

$       309,766

Accounts receivable, net

389,399

445,506

Derivative contracts

25,693

71,022

Costs in excess of billings

6,735

11,229

Prepaid expenses

40,159

31,319

Restricted deposit

-

255,000

Other current assets

18,439

19,043

Total current assets

1,789,158

1,142,885

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

  Proved 

9,975,304

12,262,921

  Unproved

548,923

865,863

  Less: accumulated depreciation, depletion and impairment

(5,384,132)

(5,231,182)

5,140,095

7,897,602

Other property, plant and equipment, net

595,511

582,375

Derivative contracts

25,219

23,617

Other assets

128,328

144,252

Total assets

$7,678,311

$    9,790,731

LIABILITIES AND EQUITY

Current liabilities

Accounts payable and accrued expenses

$   672,372

$       766,544

Billings and estimated contract loss in excess of costs incurred

5,798

15,546

Derivative contracts

12,970

14,860

Asset retirement obligations

91,113

118,504

Deposit on pending sale 

-

255,000

Total current liabilities

782,253

1,170,454

Long-term debt

3,194,543

4,301,083

Derivative contracts

40,384

59,787

Asset retirement obligations

367,456

379,906

Other long-term obligations

18,183

17,046

Total liabilities

4,402,819

5,928,276

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, 2013 and December 31, 2012; aggregate liquidation preference of $265,000

3

3

6.0% Convertible perpetual preferred stock; 2,000 shares issued and outstanding at March 31, 2013 and December 31, 2012; aggregate liquidation preference of $200,000

2

2

7.0% Convertible perpetual preferred stock; 3,000 shares issued and outstanding at March 31, 2013 and December 31, 2012; aggregate liquidation preference of $300,000

3

3

  Common stock, $0.001 par value, 800,000 shares authorized; 494,605 issued and 493,327 outstanding at March 31, 2013 and 491,578 issued and 490,359 outstanding at December 31, 2012

479

476

Additional paid-in capital

5,242,821

5,233,019

Additional paid-in capital - stockholder receivable

(5,000)

(5,000)

Treasury stock, at cost

(8,974)

(8,602)

Accumulated deficit

(3,344,269)

(2,851,048)

Total SandRidge Energy, Inc. stockholders' equity

1,885,065

2,368,853

Noncontrolling interest

1,390,427

1,493,602

Total equity

3,275,492

3,862,455

Total liabilities and equity

$7,678,311

$    9,790,731

 

SandRidge Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31, 

2013

2012

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$  (531,259)

$(216,224)

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

Depreciation, depletion and amortization

172,862

101,579

Accretion of asset retirement obligations

9,779

2,607

Debt issuance costs amortization

3,008

2,538

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

672

635

Loss on extinguishment of debt

82,005

-

Deferred income taxes

4,359

-

Unrealized loss on derivative contracts

22,417

127,836

Realized loss on amended derivative contracts

-

117,108

Realized (gain) loss on financing derivative contracts

(3,190)

2,978

Loss on sale of assets

398,174

3,080

Stock-based compensation

19,850

11,371

Other

(299)

(385)

Changes in operating assets and liabilities 

(56,921)

77,787

Net cash provided by operating activities

121,457

230,910

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures for property, plant and equipment

(421,876)

(601,841)

Acquisitions of assets

(5,048)

(10,511)

Proceeds from sale of assets

2,559,374

269,008

Net cash provided by (used in) investing activities

2,132,450

(343,344)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of borrowings

(1,115,500)

(257)

Premium on debt redemption

(61,997)

-

Debt issuance costs

(91)

(7,223)

Proceeds from the sale of royalty trust units

-

98,849

Noncontrolling interest distributions

(51,256)

(32,740)

Stock-based compensation excess tax benefit

-

7

Purchase of treasury stock

(12,041)

(7,144)

Dividends paid - preferred

(17,263)

(17,263)

Cash received (paid) on settlement of financing derivative contracts

3,208

(1,634)

Net cash (used in) provided by financing activities

(1,254,940)

32,595

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

998,967

(79,839)

CASH AND CASH EQUIVALENTS, beginning of year

309,766

207,681

CASH AND CASH EQUIVALENTS, end of year

$1,308,733

$ 127,842

Supplemental Disclosure of Cash Flow Information

Cash paid for interest, net of amounts capitalized

$  (127,181)

$  (57,174)

Cash received for income taxes

476

83

Supplemental Disclosure of Noncash Investing and Financing Activities

Deposit on pending sale

$  (255,000)

$               -

Change in accrued capital expenditures

$    (33,164)

$  (32,183)

Change in preferred stock dividends payable

$      (3,382)

$    (3,382)

Adjustment to oil and natural gas properties for estimated contract loss 

$                 -

$   10,000

Asset retirement costs capitalized

$        1,102

$     1,377

 

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 and EBITDA, drilling plans, oil and natural gas production, derivative transactions, shares outstanding, pricing differentials, operating costs and capital spending, plugging and abandonment costs, tax rates, liquidity, 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, (b) comparable "risk factors" sections of our Quarterly Reports on Form 10-Q filed thereafter, and (c) Part I, Item 1A - "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2012.  All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our company or our business or operations.  Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements.  We undertake no obligation to update or revise any forward-looking statements.

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

SOURCE SandRidge Energy, Inc.



RELATED LINKS

http://www.sandridgeenergy.com