SANDRIDGE ENERGY, INC. ANNOUNCES FINANCIAL AND OPERATING RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2022; PROVIDES CONFERENCE CALL INFORMATION AND FULL YEAR 2023 GUIDANCE

OKLAHOMA CITY, Okla., March 15, 2023 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE:SD) today announced financial and operational results for the quarter and fiscal year ended December 31, 2022.

Recent Highlights

• Generated net income of $242.2 million, or $6.59 per basic share in 2022. Adjusted net income⁽¹⁾ was $171.5 million, or $4.67 per basic share (please see table below for reconciliation of net income to adjusted net income)
• Generated adjusted EBITDA⁽¹⁾ of $191.2 million in 2022 compared to $113.5 million in 2021
• Generated approximately $120.6 million of free cash flow⁽¹⁾ in 2022, which represents a conversion rate of approximately 63% relative to adjusted EBITDA⁽¹⁾
• Production remained relatively consistent throughout the year, averaging 17.7 MBoed in 2022. This consistent production profile was driven by the Company's stable, low-decline production base and 2022 drilling, completion, and workover programs
• Drilled eight and completed six new wells in 2022. In 2023, the Company currently plans to drill two and complete four new wells
• Returned 50 wells to production in 2022 that were previously curtailed. The Company has returned 179 wells to production since the beginning of 2021, helping to flatten expected annual PDP decline to an average of ~8% over the next ten years
• Decreased 2022 adjusted G&A⁽¹⁾ by $0.4 million to $7.9 million, or $1.22 per Boe, from $8.3 million in the prior year
• Natural gas commodity derivative contracts have an average strike price of $8.39 per MMBtu with a positive mark-to-market asset value of $4.4 million as of December 31, 2022. In 2022, the Company recorded $6.0 million in gains from its commodity derivative contracts

Financial Results & Update

Profitability & Realized Pricing

For the quarter, the Company reported net income of $105.2 million, or $2.86 per share, and net cash provided by operating activities of $30.1 million. After adjusting for certain items, including a $64.5 million non-cash tax benefit for the partial release of its valuation allowance, the Company's adjusted net income⁽¹⁾ amounted to $38.0 million, or $1.03 per share, adjusted operating cash flow⁽¹⁾ totaled $45.6 million and adjusted EBITDA was $43.2 million for the quarter. The Company defines and reconciles adjusted net income, adjusted EBITDA and other non-GAAP financial measures to the most directly comparable GAAP measure in supporting tables at the conclusion of this press release.

Full year 2022 realized oil, natural gas, and natural gas liquids prices, before the impact of derivatives,⁽²⁾ were $92.21 per Bbl, $4.88 per Mcf and $31.88 per Bbl, respectively, compared to $65.10 per Bbl, $2.60 per Mcf and $22.42 per Bbl in the prior year.

For the full year 2022, the Company reported net income of $242.2 million, or $6.59 per share, and net cash provided by operating activities of $164.7 million. After adjusting for certain items, the Company's adjusted net income⁽¹⁾ amounted to $171.5 million, or $4.67 per share, adjusted operating cash flow⁽¹⁾ totaled $192.8 million and adjusted EBITDA⁽¹⁾ was $191.2 million for the year.

Operating Costs

During the fourth quarter of 2022, lease operating expense ("LOE") was $11.2 million or $7.02 per Boe compared to $9.7 million, or $5.92 per Boe in the prior quarter. For the full year 2022, LOE was $41.3 million, or $6.39 per Boe compared to $36.0 million, or $5.30 per Boe in the prior year.

For the three months ended December 31, 2022, general and administrative expense ("G&A") was $2.4 million, or $1.48 per Boe compared to $2.4 million, or $1.45 per Boe in the prior quarter. Adjusted G&A⁽¹⁾ was $2.0 million, or $1.24 per Boe during the fourth quarter of 2022 compared to $2.0 million, or $1.22 per Boe in the prior quarter. For the full year 2022, G&A was $9.4 million or $1.46 per Boe compared to $9.7 million, or $1.42 per Boe in the prior year. Adjusted G&A⁽¹⁾ was $7.9 million, or $1.22 per Boe for the full year 2022 compared to $8.3 million in the prior year.

Liquidity and Capital Structure

As of December 31, 2022, the Company had $257.5 million of cash and cash equivalents, including restricted cash. The Company has no outstanding term or revolving debt obligations.

Operational Results & Update

Production

Production totaled 1,599 MBoe (17.4 MBoed, 17% oil, 27% NGLs and 56% natural gas) for the fourth quarter and 6,463 MBoe (17.7 MBoed, 15% oil, 31% NGLs and 54% natural gas) for the full year of 2022.

2022 Development Program

SandRidge operated one drilling rig in the fourth quarter and successfully drilled three wells and completed three wells targeting the Meramec formation in the core of the NW Stack play as part of its previously announced capital development program. During 2022, the Company drilled eight wells and completed six wells, achieving production rates consistent with the Company's expectation range. The higher oil content of these new NW stack wells versus the Company's base production was the primary driver of oil as a percentage of total production increasing to approximately 17% in the fourth quarter of 2022 versus approximately 13% in the first quarter. This higher oil content further enhances SandRidge's commodity realizations.

Well Reactivation & Rod Pump Conversion Program

During the fourth quarter of 2022, the Company continued returning wells to production that were previously curtailed, and in many cases, improving their production potential through capital improvements. Strong commodity prices, high rates of returns, and low execution risk support the Company's belief that these projects represent an accretive use of capital. During 2022, the Company brought 50 wells back online, bringing the total since the beginning of 2021 to 179. SandRidge also completed 28 artificial lift conversions in 2022, which help lower forward looking costs for this well set.

Proved Developed PV-10

As outlined in the table below under "Year End 2022 Estimated Proved Reserves," SandRidge's SEC proved developed reserve PV-10 is approximately $811 million.

Year End 2022 Estimated Proved Reserves 

Proved reserves increased from 71.3 MMBoe at December 31, 2021 to 74.3 MMBoe at December 31, 2022, primarily as a result of positive revisions of 8.1 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, improved realizations and other improvements, well reactivations, and purchases of 0.2 MMBoe of proved reserves. The Company also recorded 2022 production totaling 6.5 MMBoe.

2023 Operational and Capital Expenditure Guidance

In 2023, the Company plans to spend $14 - $19 million in drilling and completions ("D&C") capital and $12 - $16 million in non-D&C capital. Total production for 2023 is projected to be 5.3 - 6.5 MMBoe. SandRidge currently plans to drill two wells and complete four wells. The Company's current 2023 plans also include 12 well reactivations and 28 artificial lift conversions. SandRidge will remain vigilant in ensuring prudent capital allocation and will continue to adapt appropriately to changing environments. Other operational guidance details can be found on the "2023 Operational and Capital Expenditure Guidance" table below.

Outlook

SandRidge will continue to focus on growing the cash value and generation capability of its asset base in a safe, responsible and efficient manner, while exercising prudent capital allocations to projects it believes provide high rates of returns in the current commodity price outlook. These projects include well reactivations, artificial lift conversions to more efficient and cost effective systems, and focused drilling in high-graded areas. The Company will continue to monitor forward-looking commodity prices, results, costs and other factors that could influence returns on investments, which will continue to shape its disciplined development decisions in 2023 and beyond. SandRidge will also continue to maintain the optionality to execute on value accretive merger and acquisition opportunities that could bring synergies, leverage the Company's core competencies, complement its portfolio of assets, further utilize its approximately $1.6 billion of net operating losses ("NOLs"), or otherwise yield attractive returns for its shareholders.

Environmental, Social, and Governance ("ESG")

SandRidge maintains its Environmental, Social, and Governance ("ESG") commitment, to include no routine flaring of produced natural gas and transporting approximately 97% of its produced water via pipeline instead of truck. Additionally, SandRidge maintains an emphasis on the safety and training of our workforce. We have personnel dedicated to the close monitoring of our safety standards and daily operations.

Conference Call Information

The Company will host a conference call to discuss these results on Thursday, March 16, 2023 at 10:00 am CT. The conference call can be accessed by registering online in advance at https://conferencingportals.com/event/IsWEjozq at which time registrants will receive dial-in information as well as a conference ID. At the time of the call, participants will dial in using the participant number and conference ID provided upon registration. The Company's latest presentation is available on the Company's website at https://investors.sandridgeenergy.com/Investor-Relations/.

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

Contact Information

Investor Relations  
SandRidge Energy, Inc.  
1 E. Sheridan Ave. Suite 500  
Oklahoma City, OK 73104  
[email protected]

About SandRidge Energy, Inc.

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

-Tables to Follow-

2023 Operational and Capital Expenditure Guidance

Presented below is the Company's operational and capital expenditure guidance for 2023: 

Operational and Financial Statistics 

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

Capital Expenditures  

The table below presents actual results of the Company's capital expenditures for the three months and year ended  December 31, 2022:

Derivative Contracts

The table below sets forth the Company's open derivative contracts as of December 31, 2022:

Capitalization

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

Non-GAAP Financial Measures

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

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

The Company defines Adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities as shown in the following table. Adjusted Operating cash flow is a supplemental financial measure used by the Company's management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the Company's ability to internally fund exploration and development activities or incur new debt. The Company also uses this measure because operating cash flow relates to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. Further, Adjusted operating cash flow allows the Company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. This measure should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with GAAP.

Reconciliation of Free Cash Flow

The Company defines free cash flow as net cash provided by operating activities plus net cash (used in) provided by investing activities less the cash flow impact of acquisitions and divestitures. Free cash flow is a supplemental financial measure used by the Company's management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the Company's ability to internally fund exploration and development activities or incur new debt. This measure should not be considered in isolation or as a substitute for net cash provided by operating or investing activities prepared in accordance with GAAP.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

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

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

Reconciliation of Cash Provided by Operating Activities to Adjusted EBITDA

Reconciliation of Net Income Available to Common Stockholders to Adjusted Net Income Available to Common Stockholders

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

Management uses the supplemental measure of adjusted net income as an indicator of the Company's operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net income is not a measure of financial performance under GAAP and should not be considered a substitute for net income available to common stockholders.

Reconciliation of G&A to Adjusted G&A

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

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

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 "2023 Operational and Capital Expenditure Guidance." These forward-looking statements are neither historical facts nor assurances of future performance and reflect SandRidge's current beliefs and expectations regarding future events and operating performance. The forward-looking statements include projections and estimates of the Company's corporate strategies, future operations, development plans and appraisal programs, drilling inventory and locations,  estimated oil, natural gas and natural gas liquids production, price realizations and differentials, hedging program, projected operating, general and administrative and other costs, projected capital expenditures, tax rates,  efficiency and cost reduction initiative outcomes, liquidity and capital structure. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to natural gas wells, the availability and terms of capital, the ability of counterparties to transact with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in Part I, Item 1A - "Risk Factors" of our Annual Report on Form 10-K and in comparable "Risk Factor" sections of our Quarterly Reports on Form 10-Q filed after such form 10-K. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our Company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements. 

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

SOURCE SandRidge Energy, Inc.