SandRidge Energy, Inc. Reports Financial and Operational Results for the First Quarter 2021

<br /> SandRidge Energy, Inc. Reports Financial and Operational Results for the First Quarter 2021<br />

PR Newswire


OKLAHOMA CITY

, May 11, 2021 /PRNewswire/ — SandRidge Energy, Inc. (the “Company” or “SandRidge”) (NYSE: SD) today announced financial and operational results for the quarter ended March 31, 2021.


Results and highlights during the quarter:


  • Improved net cash


    1

    by

    $48.2 million

    to a net cash position of

    $56.5 million

    compared to a net cash position of

    $8.3 million

    at the end of the prior quarter, the increase was primarily due to the sale of North Park Basin

  • Adjusted EBITDA

    2

    was

    $21.7 million

    compared to

    $9.1 million

    in the prior quarter, primarily due to commodity price increases

  • Total production was 18.2 MBoed compared to 21.1 MBoed in the prior quarter. Produced 17.5 MBoed from our Mid-Continent assets, compared to 19.0 MBoed in the prior quarter

  • Net income was

    $35.0 million

    , or

    $0.97

    per share. Adjusted net income

    2

    was

    $17.4 million

    , or

    $0.48

    per share

  • G&A was

    $2.1 million

    , or

    $1.27

    per boe compared to

    $3.0 million

    , or

    $1.57

    per boe in the prior quarter. G&A included

    $0.4 million

    related to one time savings. Adjusted G&A

    2

    was

    $1.9 million

    , or

    $1.14

    per boe compared to

    $2.8 million

    , or

    $1.44

    per boe in the prior quarter

  • LOE was

    $8.0 million

    or

    $4.85

    per boe compared to

    $11.0 million

    , or

    $5.69

    per boe in the prior quarter. Mid-Continent represented

    $7.1 million

    or

    $4.47

    per boe compared to

    $9.0 million

    or

    $5.15

    per boe in the prior quarter

  • Realized oil, natural gas, and natural gas liquids prices before the impact of derivatives were

    $53.99

    ,

    $1.85

    and

    $17.00

    , respectively, compared to

    $38.18

    ,

    $1.56

    and

    $9.12

    , in the prior quarter

  • Closed on the sale of North Park Basin for a purchase price of

    $47 million

    . Net proceeds were

    $39.7 million

    in cash as a result of customary effective date to closing date adjustments. The sale resulted in a

    $19.7 million

    gain.

  • Closed on the acquisition of the overriding royalty interests held by SandRidge Mississippian Royalty Trust I for a net purchase price of

    $3.6 million

    , which management believes approximates a PV-55 valuation and a 2-year cash on cash payback at early April strip pricing

  • Continued streak without a recordable Health, Safety and Environmental (“HS&E”) incident for 31 months as of the end of the quarter


_________________________



1


Net Cash is defined as cash and cash equivalents less total debt.



2


See page 9-12 for non-GAAP financial measures definitions.





Financial Results


For the quarter, the Company reported a net income of

$35.0 million

, or

$0.97

per share, and net cash provided by operating activities of

$14.3 million

. After adjusting for certain items, the Company’s adjusted net income amounted to

$17.4 million

, or

$0.48

per share, operating cash flow totaled

$19.6 million

and adjusted EBITDA was

$21.7 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 on pages 9-12.




Operational Results and Activity


Production totaled 1,641 MBoe (18.2 MBoed, 17.6% oil, 31.7% NGLs and 50.7% natural gas) for the quarter.


Mid-Continent Assets in

Oklahoma

and

Kansas

Production in the Mid-Continent totaled 1,574 MBoe (17.5 MBoed, 14.0% oil, 33.1% NGLs and 52.9% natural gas) during the quarter.

Management believes the unaudited proved developed PV-10 reserve value of its Mid-Continent assets to be approximately

$233 million

, with an effective date of

April 1, 2021

, as routinely updated for the quarter from the Company’s engineered year-end 2020 reserves, consistent with standard industry reserve practice, including performance and commercial updates for price differentials, operating expenses and other commercials, based on the historical trailing 12 month averages ending

December 2020

, using

May 5, 2021

Nymex strip pricing, and including the subsequent acquisition of the overriding royalty interests of SandRidge Mississippian Trust I.


North Park Basin Assets in

Colorado

Net production for North Park Basin totaled 67 MBoe (0.7 MBoed, 100.0% oil) for 36 days during the quarter in which the Company owned the assets.




Overriding Royalty Interest Acquisition


On

April 22, 2021

, the Company announced the acquisition of all the overriding royalty interest assets of SandRidge Mississippian Trust I (the “Trust”). The gross purchase price is

$4.9 million

(net

$3.6 million

, given the Company’s 26.9% ownership of the Trust).




North Park Basin Sale


On

February 5, 2021

, the Company sold all of its oil and natural gas properties and related assets of the North Park Basin in

Colorado

for a purchase price of

$47 million

. The sale closed for net proceeds of

$39.7 million

in cash as a result of customary effective date to closing date adjustments.




2021 Capital Expenditures and Operational Guidance


The Company reaffirms its 2021 capital expenditures and operational guidance previously published on

March 3, 2021

.




Liquidity and Capital Structure


As of March 31, 2021, the Company’s total liquidity was

$83.9 million

, based on

$73.9 million

of cash, excluding restricted cash and

$10.0 million

available under its credit facility.

As of

May 7, 2021

, the Company’s cash on hand, excluding restricted cash, was approximately

$81

.2 million.




Conference Call Information


The Company will host a conference call to discuss these results as well as an updated investor presentation  on

Wednesday, May 12, 2021

at

10:00 am CT

. The conference call can be accessed by registering online at

http://www.directeventreg.com/registration/event/1798929

at which time registrants will receive dial-in information as well as a passcode and registrant ID. At the time of the call, participants will dial in using the numbers in the confirmation email and enter their passcode and ID, upon which they will enter the conference call. The presentation will be on the Company’s website at

http://investors.sandridgeenergy.com/Investor-Relations/

.

A live audio webcast of the conference call will also be available via SandRidge’s website,

www.sandridgeenergy.com

, under Investor Relations/Presentation & Events. The webcast will be archived for replay on the Company’s website for 30 days.



Operational and Financial Statistics

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



Three Months Ended



March 31,



2021



2020



Production – Total


Oil (MBbl)


288


682


NGL (MBbl)


521


769


Natural Gas (MMcf)


4,993


6,695


Oil equivalent (MBoe)


1,641


2,567


Daily production (MBoed)


18.2


28.2



Average price per unit


Realized oil price per barrel – as reported


$


53.99


$


42.01


Realized impact of derivatives per barrel




6.00


Net realized price per barrel


$


53.99


$


48.01


Realized NGL price per barrel – as reported


$


17.00


$


7.72


Realized impact of derivatives per barrel






Net realized price per barrel


$


17.00


$


7.72


Realized natural gas price per Mcf – as reported


$


1.85


$


0.83


Realized impact of derivatives per Mcf






Net realized price per Mcf


$


1.85


$


0.83


Realized price per Boe – as reported


$


20.49


$


15.64


Net realized price per Boe – including impact of derivatives


$


20.49


$


17.23



Average cost per Boe


Lease operating


$


4.85


$


6.09


Production, ad valorem, and other taxes


$


1.33


$


1.25


Depletion

(1)


$


1.53


$


9.68



Earnings per share


Earnings per share applicable to common stockholders


Basic


$


0.97


$


(0.36)


Diluted


$


0.94


$


(0.36)


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


Basic


$


0.48


$


(0.21)


Diluted


$


0.47


$


(0.21)


Weighted average number of shares outstanding (in thousands)


Basic


36,156


35,551


Diluted


37,439


35,551



(1)

Includes accretion of asset retirement obligation.



Capital Expenditures

The table below presents actual results of the Company’s capital expenditures for the three months ended March 31, 2021.



Three Months Ended



March 31, 2021



(In thousands)


Drilling, completion and capital workovers


$


2,037


Other capital expenditures


111


Total Capital Expenditures


$


2,148


(excluding acquisitions and plugging and abandonment)



Capitalization

The Company’s capital structure as of March 31, 2021 and December 31, 2020 is presented below:



March 31, 2021



December 31, 2020



(In thousands)


Cash, cash equivalents and restricted cash


$


76,515


$


28,266


Long-term debt


$


20,000


$


20,000


Total debt


20,000


20,000


Stockholders’ equity


Common stock


36


36


Warrants


88,520


88,520


Additional paid-in capital


1,062,437


1,062,220


Accumulated deficit


(987,667)


(1,022,710)


Total SandRidge Energy, Inc. stockholders’ equity


163,326


128,066


Total capitalization


$


183,326


$


148,066



SandRidge Energy, Inc. and Subsidiaries



Condensed Consolidated Statements of Operations (Unaudited)



(In thousands, except per share amounts)



Three Months Ended March 31,



2021



2020


Revenues


Oil, natural gas and NGL


$


33,623


$


40,139


Other




190


Total revenues


33,623


40,329


Expenses


Lease operating expenses


7,954


15,642


Production, ad valorem, and other taxes


2,176


3,199


Depreciation and depletion—oil and natural gas


2,505


24,855


Depreciation and amortization—other


1,494


2,634


Impairment




7,970


General and administrative


2,090


5,483


Restructuring expenses


2,054




Employee termination benefits


49


3,254


(Gain) loss on derivative contracts




(10,226)


(Gain) loss on sale of assets


(19,713)




Other operating (income) expense, net


(48)


277


Total expenses


(1,439)


53,088


Income (loss) from operations


35,062


(12,759)


Other income (expense)


Interest expense, net


(47)


(637)


Other income (expense), net


28


76


Total other income (expense)


(19)


(561)


Income (loss) before income taxes


35,043


(13,320)


Income tax expense (benefit)




(650)


Net income (loss)


$


35,043


$


(12,670)


Net income (loss) per share


Basic


$


0.97


$


(0.36)


Diluted


$


0.94


$


(0.36)


Weighted average number of common shares outstanding


Basic


36,156


35,551


Diluted


37,439


35,551



SandRidge Energy, Inc. and Subsidiaries



Condensed Consolidated Balance Sheets (Unaudited)



(In thousands)



March 31,

2021



December 31,

2020



ASSETS


Current assets


Cash and cash equivalents


$


73,876


$


22,130


Restricted cash – other


2,639


6,136


Accounts receivable, net


18,963


19,576


Prepaid expenses


2,841


2,890


Other current assets


80


80


Total current assets


98,399


50,812


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


Proved


1,443,508


1,463,950


Unproved


13,341


17,964


Less: accumulated depreciation, depletion and impairment


(1,376,754)


(1,375,692)


80,095


106,222


Other property, plant and equipment, net


101,057


103,118


Other assets


703


680


Total assets


$


280,254


$


260,832



LIABILITIES AND STOCKHOLDERS’ EQUITY


Current liabilities


Accounts payable and accrued expenses


$


42,280


$


51,426


Asset retirement obligation


15,937


16,467


Other current liabilities


364


984


Total current liabilities


58,581


68,877


Long-term debt


20,000


20,000


Asset retirement obligation


35,934


40,701


Other long-term obligations


2,413


3,188


Total liabilities


116,928


132,766


Stockholders’ Equity


Common stock, $0.001 par value; 250,000 shares authorized; 36,135 issued and outstanding at March 31,

2021 and 35,928 issued and outstanding at December 31, 2020


36


36


Warrants


88,520


88,520


Additional paid-in capital


1,062,437


1,062,220


Accumulated deficit


(987,667)


(1,022,710)


Total stockholders’ equity


163,326


128,066


Total liabilities and stockholders’ equity


$


280,254


$


260,832



SandRidge Energy, Inc. and Subsidiaries



Condensed Consolidated Cash Flows (Unaudited)



(In thousands)



Three Months Ended March 31,



2021



2020


CASH FLOWS FROM OPERATING ACTIVITIES


Net Income (loss)


$


35,043


$


(12,670)


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


Provision for doubtful accounts


21


283


Depreciation, depletion, and amortization


3,999


27,489


Impairment




7,970


Debt issuance costs amortization


16


159


(Gain) loss on derivative contracts




(10,226)


Cash received on settlement of derivative contracts




4,087


Loss (gain) on sale of assets


(19,713)




Stock-based compensation


235


169


Other


35


156


Changes in operating assets and liabilities


(5,305)


686


Net cash provided by (used in) operating activities


14,331


18,103


CASH FLOWS FROM INVESTING ACTIVITIES


Capital expenditures for property, plant and equipment


(3,094)


(5,452)


Acquisition of assets


(59)




Proceeds from sale of assets


37,238


989


Net cash provided by (used in) investing activities


34,085


(4,463)


CASH FLOWS FROM FINANCING ACTIVITIES


Proceeds from borrowings




21,000


Repayments of borrowings




(32,500)


Reduction of financing lease liability


(74)


(366)


Debt issuance costs


(74)




Cash paid for tax obligations on vested stock awards


(19)


(1)


Net cash provided by (used in) financing activities


(167)


(11,867)


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


48,249


1,773


CASH, CASH EQUIVALENTS and RESTRICTED CASH, beginning of year


28,266


5,968


CASH, CASH EQUIVALENTS and RESTRICTED CASH, end of period


$


76,515


$


7,741


Supplemental Disclosure of Cash Flow Information


Cash paid for interest, net of amounts capitalized


$


(92)


$


(540)


Cash received for income taxes


$




$


616


Supplemental Disclosure of Noncash Investing and Financing Activities


Purchase of PP&E in accounts payable


$


1,342


$


1,066


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


$


363


$


67


Carrying values of properties exchanged


$




$


3,890



Non-GAAP Financial Measures

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



Reconciliation of Cash Provided by Operating Activities to Operating Cash Flow

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



Three Months Ended March 31,



2021



2020



(In thousands)


Net cash (used in) provided by operating activities


$


14,331


$


18,103


Changes in operating assets and liabilities


5,305


(686)


Operating cash flow


$


19,636


$


17,417



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

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

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



Three Months Ended March 31,



2021



2020



(In thousands)


Net Income (loss)


$


35,043


$


(12,670)


Adjusted for


Income tax (benefit) expense




(650)


Interest expense


48


644


Depreciation and amortization – other


1,494


2,634


Depreciation and depletion – oil and natural gas


2,505


24,855


EBITDA


39,090


14,813


Asset impairment




7,970


Stock-based compensation (1)


219


128


(Gain) loss on derivative contracts




(10,226)


Cash received upon settlement of derivative contracts




4,087


Employee termination benefits


49


3,254


Restructuring expenses


2,054




Other


(19,714)


107


Adjusted EBITDA


$


21,698


$


20,133



1.

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



Reconciliation of Cash Provided by Operating Activities to Adjusted EBITDA



Three Months Ended March 31,



2021



2020



(In thousands)


Net cash (used in) provided by operating activities


$


14,331


$


18,103


Changes in operating assets and liabilities


5,305


(686)


Interest expense


48


644


Employee termination benefits

(1)


49


3,214


Income tax (benefit) expense




(650)


Other


1,965


(492)


Adjusted EBITDA


$


21,698


$


20,133



1.

Excludes associated stock-based compensation.



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

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

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



Three Months Ended March 31, 2021



Three Months Ended March 31, 2020



$



$/Diluted Share



$



$/Diluted Share



(In thousands, except per share amounts)


Net income (loss) available to common stockholders


$


35,043


$


0.94


$


(12,670)


$


(0.35)


Asset impairment






7,970


0.22


Gain  on derivative contracts






(10,226)


(0.29)


Cash received upon settlement of derivative contracts






4,087


0.11


Employee termination benefits


49




3,254


0.09


Restructuring expenses


2,054


0.05






Other


(19,714)


(0.53)


113


0.01


Adjusted net income (loss) available to common

stockholders


$


17,432


$


0.47


$


(7,472)


$


(0.21)



Basic



Diluted



Basic



Diluted


Weighted average number of common shares outstanding


36,156


37,439


35,551


35,551


Total adjusted net income (loss) per share


$


0.48


$


0.47


$


(0.21)


$


(0.21)



Reconciliation of G&A to Adjusted G&A

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

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



Three Months Ended March 31, 2021



Three Months Ended March 31, 2020



$



$/Boe



$



$/Boe



(In thousands, except per Boe amounts)


General and administrative


$


2,090


$


1.27


$


5,483


$


2.14


Stock-based compensation (1)


(219)


(0.13)


(128)


(0.05)


Adjusted G&A


$


1,871


$


1.14


$


5,355


$


2.09


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

For further information, please contact:

Investor Relations

SandRidge Energy, Inc.

1 E. Sheridan Ave. Suite 500


Oklahoma City, OK

73104


[email protected]


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 “Revised 2020 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 and the Company’s unaudited proved developed PV-10 reserve value of its Mid-Continent assets. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to natural gas wells, the availability and terms of capital, the ability of counterparties to transactions with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in Part I, Item 1A – “Risk Factors” of our Annual Report on Form 10-K and in comparable “Risk Factor” sections of our Quarterly Reports on Form 10-Q filed after such form 10-K. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our Company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements.


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

Oklahoma

and

Kansas

. Further information can be found at

www.sandridgeenergy.com

.

Cision
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