SD Updates Shareholders --------------------------
Post# of 29735
Posted On: 11/05/2015 9:38:26 AM
SD Updates Shareholders
SandRidge Energy 3Q Loss/Shr $1.23 >SD
BY Dow Jones & Company, Inc.
— 4:17 PM ET 11/04/2015
SandRidge Energy, Inc. ( SD
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) Updates Shareholders on Operations and Reports Financial Results for Third Quarter and First Nine Months of 2015
Adjusted EBITDA of $118 Million for the Third Quarter and Adjusted Loss of $0.07 per Diluted Share
Third Quarter Production of 79.9 MBoepd (31% Oil, 17% NGLs)
Raising 2015 Production Guidance Range to 29.5-30.5 MMBoe from 29.0-30.5 MMBoe While Lowering Lifting Costs per Boe Range to $10.50-$11.50 from $11.50-$12.50
Achieved Year End Goal of $2.3 Million per Mississippian Lateral in Third Quarter
Bond Repurchases and Exchanges Address $525 Million of Debt
$1.3 Billion of Liquidity at End of Third Quarter, Including $790 Million in Cash
Events Subsequent to Third Quarter 2015
Agreement to Acquire North Park Basin Niobrara Shale Oil Assets for $190 Million Adds 1.0 MBoepd of Production, 27 MMBoe of Proved Reserves (82% Oil) and Materially Expands Drilling Inventory
Additional Bond Repurchases and Exchanges Address $400 Million of Debt
Acquisition of Piñon Gathering System Eliminates $40 Million of Annual Expenses
Affirmed $500 Million Borrowing Base and Amended Senior Credit Facility
PR Newswire
OKLAHOMA CITY, Nov. 4, 2015
OKLAHOMA CITY, Nov. 4, 2015 /PRNewswire/ -- SandRidge Energy, Inc. ( SD
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) today announced financial and operational results for the quarter ended September 30, 2015. Additionally, presentation slides will be available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Events at 7 am ET on November 5(th) .
The Company had a strong operational quarter, and has both increased 2015 production guidance and decreased 2015 lease operating expense guidance due to positive ongoing production and expense results and the acquisition of the Piñon gathering system. The acquisition eliminates approximately $40 million of expenses annually beginning in November 2015.
As previously announced during and after the third quarter, SandRidge bought back $350 million of unsecured notes for $124 million in cash (36% of par value), creating annual interest expense savings of $27 million. In the transactions, the company also exchanged $575 million of unsecured notes into similar notes convertible into approximately 364 shares of SandRidge common stock per $1,000 of par value of the notes.
After the close of the third quarter, SandRidge entered into a purchase and sales agreement to acquire assets from EE3, LLC, a North Park Basin, Colorado producer consisting of 16 wells producing 1.0 MBoepd with 136,000 net acres of Niobrara Shale oil development potential.
"Our third quarter results featured continued cost control, strong operations, and we drilled eight more extended laterals. We also addressed $925 million of debt through bond repurchases at a steep discount to face value, and additional bond exchange agreements reflecting conversion of debt to equity at a very large premium to our recent share price, making these exchanges extremely accretive to shareholders. In October, we created considerable value by acquiring the Piñon gathering system, reducing annual expenses by approximately $40 million." said James Bennett, SandRidge's Chief Executive Officer and President.
"Topping off the significant and varied activity of recent weeks, our $190 million acquisition of assets in Colorado, which we announced today, gives SandRidge entry into the derisked Niobrara Shale oil play. We intend to allocate significant capital there, taking advantage of our medium depth horizontal drilling and infrastructure management skillsets. Combining continued development of our existing Mid-Continent assets with our new high return Niobrara play, we aim to diversify and improve our overall capital efficiencies. We are visibly capturing balance sheet, operational, and acquisition opportunities to enhance our value proposition to investors."
Drilling and Operational Activities
Mid-Continent: During the third quarter of 2015, SandRidge drilled 31 laterals. The Company averaged six horizontal rigs operating in the play. The Company's Mid-Continent assets produced 70.6 MBoepd during the third quarter (30% oil, 19% NGLs, 51% natural gas).
West Texas: During the third quarter, Permian Basin properties produced approximately 4.2 MBoepd (82% oil, 11% NGLs, 7% natural gas). Legacy West Texas Overthrust properties produced approximately 5.1 MBoepd (99% natural gas, 1% oil).
Operational Highlights
-- Average third quarter production of 79.9 MBoepd, a 10% decrease versus
the second quarter of 2015
-- Achieved $2.3 million per Mississippian lateral cost in the third quarter,
a $700,000, or 23%, reduction from 2014 per lateral costs
-- Spud 14 laterals with multilateral design in the third quarter (8
extended laterals and 6 full section development laterals) with an
average cost of $2.2 million per lateral
-- 19 single Mississippian laterals delivered an average 30-day IP rate of
447 Boepd (51% oil), 127% of Mississippian type curve in the third
quarter
-- 101 multilaterals delivered a cumulative average program to date 90-day
IP rate of 280 Boepd (52% oil), 100% of Mississippian type curve through
the third quarter
-- Reduced Mid-Continent annual LOE guidance by $0.80 per Boe primarily due
to a reduction in power use and generator rentals
Operational Highlights - Subsequent to Third Quarter
As previously announced, the Company acquired the Piñon gathering system, in connection with its West Texas Overthrust properties. Acquisition of this asset eliminates $40 million of annual expenses, beginning in November 2015.
Steve Turk, SandRidge's Chief Operating Officer noted, "The teams delivered strong results averaging 79.9 MBoepd in the third quarter, 70.6 MBoepd from our original Mid-Continent assets. Confidence in our program led to the decision to again raise the lower end of our annual production guidance by 500 MBoe. Ahead of our year end goal, we also achieved an average cost of $2.3 million per Mississippian lateral in the third quarter. New drilling in the quarter consisted of 56% multilaterals from extended lateral development and our improved full section development design, including our first successfully executed 2-mile extended lateral Woodford well. Expanding upon these established capabilities, we are excited about applying the team's proven low cost operations expertise to our newly acquired Niobrara assets in the North Park Basin. We are confident that our experience in medium depth horizontal drilling and our disciplined approach to reducing operating costs will enhance the value of this oily multiple bench shale resource play."
Key Financial Results
Third Quarter
-- Adjusted EBITDA, net of Noncontrolling Interest, was $118 million for
third quarter 2015 compared to $225 million in third quarter 2014
-- Adjusted operating cash flow of $45 million for third quarter 2015
compared to $203 million in third quarter 2014
-- Adjusted net loss of $45 million, or $0.07 per diluted share, for third
quarter 2015 compared to adjusted net income of $43 million, or $0.07 per
diluted share, in third quarter 2014
Nine Months
-- Adjusted EBITDA, net of Noncontrolling Interest, was $460 million in the
first nine months of 2015 compared to $596 million in first nine months
of 2014, pro forma for divestitures
-- Adjusted operating cash flow of $302 million in the first nine months of
2015 compared to $509 million in the first nine months of 2014
-- Adjusted net loss of $61 million, or $0.10 per diluted share, in the
first nine months of 2015 compared to adjusted net income of $109 million,
or $0.19 per diluted share, in the first nine months of 2014
Adjusted net income (loss) available to common stockholders, adjusted EBITDA, pro forma adjusted EBITDA and adjusted 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 10.
Financial / Other Highlights
-- Ended the third quarter with $1.3 billion in liquidity, including $790
million in cash
-- Bond repurchases and exchanges address $525 million of total debt,
retiring $250 million with $94 million in cash (38% of par value) and
exchanging $275 million into debt, convertible into equity
-- Suspension of 7.0% semi-annual preferred stock dividend payment
-- Incurred a non-cash impairment charge of approximately $1.1 billion
primarily due to a ceiling test impairment, resulting from a significant
decline in oil price
Financial / Other Highlights -- Subsequent to Third Quarter
-- Additional bond repurchases and exchanges address $400 million of total
debt, retiring $100 million with $30 million in cash (30% of par value)
and exchanging $300 million into debt, convertible into equity
-- Affirmed $500 million borrowing base and amended credit agreement
allowing for an increase in an amount available for cash repurchase of
senior unsecured notes from $200 million to $275 million
-- As of October 30, 2015, a total principal amount of $126 million in both
2022 and 2023 unsecured convertible notes had voluntarily converted into
common stock
Operational and Financial Statistics
Information regarding the Company's production, pricing, costs and earnings is presented below:
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Production - Total
Oil (MBbl) 2,262 2,644 7,604 7,927
NGL (MBbl) 1,246 1,109 3,883 2,500
Natural gas (MMcf) 23,058 21,501 71,133 62,335
Oil equivalent
(MBoe) 7,351 7,337 23,343 20,816
Daily production
(MBoed) 79.9 79.7 85.5 76.2
Production -
Mid-Continent
Oil (MBbl) 1,938 2,197 6,554 5,849
NGL (MBbl) 1,202 1,063 3,764 2,314
Natural gas (MMcf) 20,128 18,190 62,292 48,704
Oil equivalent
(MBoe) 6,495 6,292 20,700 16,280
Daily production
(MBoed) 70.6 68.4 75.8 59.6
Average price per
unit
Realized oil price
per barrel - as
reported $ 43.33 $ 94.60 $ 47.55 $ 97.12
Realized impact of
derivatives per
barrel 28.85 0.26 32.87 (1.27)
Net realized price
per barrel $ 72.18 $ 94.86 $ 80.42 $ 95.85
Realized NGL price
per barrel - as
reported $ 13.29 $ 35.84 $ 14.69 $ 37.84
Realized impact of
derivatives per
barrel - - - -
Net realized price
per barrel $ 13.29 $ 35.84 $ 14.69 $ 37.84
Realized natural
gas price per Mcf
- as reported $ 2.19 $ 3.24 $ 2.20 $ 3.86
Realized impact of
derivatives per
Mcf 0.09 0.13 0.41 (0.22)
Net realized price
per Mcf $ 2.28 $ 3.37 $ 2.61 $ 3.64
Realized price per
Boe - as reported $ 22.46 $ 49.01 $ 24.65 $ 53.08
Net realized price
per Boe -
including impact
of derivatives $ 31.61 $ 49.48 $ 36.58 $ 51.95
Average cost per
Boe
Lease operating $ 9.91 $ 11.27 $ 10.46 $ 12.32
Production taxes 0.50 1.14 0.54 1.15
General and
administrative
General and
administrative,
excluding
stock-based
compensation $ 4.17 $ 2.77 $ 4.01 $ 3.80
Stock-based
compensation (1) 0.49 0.58 0.65 0.76
Total general and
administrative $ 4.66 $ 3.35 $ 4.66 $ 4.56
General and
administrative -
adjusted
General and
administrative,
excluding
stock-based
compensation (2) $ 3.29 $ 2.76 $ 3.37 $ 3.44
Stock-based
compensation
(1)(3) 0.48 0.55 0.44 0.66
Total general and
administrative -
adjusted $ 3.77 $ 3.31 $ 3.81 $ 4.10
Depletion (4) $ 9.20 $ 15.49 $ 11.58 $ 15.99
Lease operating
cost per Boe
Mid-Continent $ 7.09 $ 8.18 $ 7.75 $ 8.04
Earnings per share
Loss per share
applicable to
common
stockholders
Basic $ (1.23) $ 0.30 $ (6.14) $ (0.11)
Diluted (1.23) 0.27 (6.14) (0.11)
Adjusted net (loss)
income per share
available to common
stockholders
Basic $ (0.11) $ 0.07 $ (0.18) $ 0.14
Diluted (0.07) 0.07 0.10 0.19
Weighted average
number of common
shares outstanding
(in thousands)
Basic 526,388 485,458 500,077 485,194
Diluted (5) 641,526 575,912 586,424 578,125
(1) Expense for equity-classified stock-based awards.
(2) Excludes severance, legal settlements and shareholder litigation costs
totaling $6.4 million and $14.9 million for the three and nine-month
periods ended September 30, 2015, respectively. Excludes severance,
transaction costs and shareholder litigation costs totaling $0.1 million
and $7.5 million for the three and nine-month periods ended September 30,
2014, respectively.
(3) Three and nine-month periods ended September 30, 2015 exclude $0.1
million and $4.8 million, respectively, for the acceleration of certain
stock awards. Three and nine-month periods ended September 30, 2014
exclude $0.2 million and $2.2 million, respectively, 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.
Capital Expenditures
The table below summarizes the Company's capital expenditures for the three and nine-month periods ended September 30, 2015 and 2014:
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Drilling and
production
Mid-Continent $ 87,183 $336,171 $511,789 $ 743,059
Permian Basin 675 49,314 4,257 155,788
Gulf of
Mexico/Gulf
Coast - - - 22,975
87,858 385,485 516,046 921,822
Leasehold and
geophysical
Mid-Continent 15,848 47,260 42,434 127,296
Gulf of
Mexico/Gulf
Coast - - - 159
Other 651 2,340 4,391 7,990
16,499 49,600 46,825 135,445
Inventory 1,656 674 (3,356) (728)
Total exploration
and development 106,013 435,759 559,515 1,056,539
Drilling and oil
field services 259 3,603 2,732 10,877
Midstream 3,719 14,045 20,400 25,810
Other - general 3,306 14,422 18,405 27,311
Total capital
expenditures,
excluding
acquisitions 113,297 467,829 601,052 1,120,537
Acquisitions (244) 367 3,231 16,920
Total capital
expenditures $113,053 $468,196 $604,283 $1,137,457
Derivative Contracts
The table below sets forth the Company's consolidated oil and natural gas price swaps and collars for the years 2015 and 2016 as of November 4, 2015:
Quarter Ending
3/31/2015 6/30/2015 9/30/2015 12/31/2015 FY2015
Oil (MMBbls)
Swap Volume 2.29 1.73 1.01 0.55 5.59
Swap $92.71 $91.55 $92.43 $94.11 $92.44
Three-way
Collar Volume 0.72 0.73 1.56 1.56 4.58
Call Price $103.13 $103.13 $103.65 $103.65 $103.48
Put Price $90.82 $90.82 $90.03 $90.03 $90.28
Short Put
Price $73.13 $73.13 $78.15 $78.15 $76.56
Natural Gas
(Bcf)
Swap Volume 14.40 1.82 1.84 1.84 19.90
Swap $4.62 $4.20 $4.20 $4.20 $4.51
Collar Volume 0.25 0.25 0.25 0.25 1.01
Collar: High $8.55 $8.55 $8.55 $8.55 $8.55
Collar: Low $4.00 $4.00 $4.00 $4.00 $4.00
Natural Gas
Basis (Bcf)
Swap Volume 9.65 15.47 15.64 15.64 56.40
Swap (0.29) (0.30) (0.30) (0.30) (0.30)
Quarter Ending
3/31/2016 6/30/2016 9/30/2016 12/31/2016 FY2016
Oil (MMBbls)
Swap Volume 0.36 0.36 0.37 0.37 1.46
Swap $88.36 $88.36 $88.36 $88.36 $88.36
Three-way
Collar Volume 0.91 0.91 0.37 0.37 2.56
Call Price $101.35 $101.35 $99.63 $99.63 $100.85
Put Price $90.00 $90.00 $90.00 $90.00 $90.00
Short Put
Price $83.39 $83.39 $82.50 $82.50 $83.14
Natural Gas
(Bcf)
Swap Volume - - - - -
Swap - - - - -
Collar Volume - - - - -
Collar: High - - - - -
Collar: Low - - - - -
Natural Gas
Basis (Bcf)
Swap Volume 2.73 2.73 2.76 2.76 10.98
Swap (0.38) (0.38) (0.38) (0.38) (0.38)
Balance Sheet
The Company's capital structure at September 30, 2015 and December 31, 2014 is presented below:
September 30, December 31,
2015 2014
(in thousands)
Cash and cash equivalents $ 790,142 $ 181,253
Current maturities of long-term debt $ - $ -
Long-term debt (net of current
maturities)
8.75% Senior Secured Notes due 2020 1,250,000 -
Senior Unsecured Notes
8.75% Senior Notes due 2020, net 401,149 445,402
7.5% Senior Notes due 2021 996,309 1,178,486
8.125% Senior Notes due 2022 601,187 750,000
7.5% Senior Notes due 2023, net 622,923 821,548
Convertible Senior Unsecured Notes
8.125% Convertible Senior Notes due
2022, net 36,406 -
7.5% Convertible Senior Notes due
2023, net 29,020 -
Total debt 3,936,994 3,195,436
Stockholders' (deficit) equity
Preferred stock 6 6
Common stock 542 477
Additional paid-in capital 5,267,725 5,201,524
Treasury stock, at cost (6,876) (6,980)
Accumulated deficit (6,328,118) (3,257,202)
Total SandRidge Energy, Inc.
stockholders' (deficit) equity (1,066,721) 1,937,825
Noncontrolling interest 663,451 1,271,995
Total capitalization $ 3,533,724 $ 6,405,256
Pro Forma Capitalization
The Company's capital structure at September 30, 2015, pro forma for subsequent events and based on par values is presented below:
Actual as of Actual as of Pro forma (1)
June 30, 2015 September 30, 2015 September 30, 2015
(in millions)
Cash $ 984 $ 790 $ 699
$500 million
Revolving Credit
Facility (undrawn) - - -
8.75% Senior
Secured 2(nd)
Lien Notes due
2020 1,250 1,250 1,328
Total Secured Debt $ 1,250 $ 1,250 $ 1,328
Unsecured Debt
8.75% Senior Notes
due 2020 450 405 396
7.5% Senior Notes
due 2021 1,146 994 758
8.125% Senior
Notes due 2022 729 601 528
7.5% Senior Notes
due 2023 825 625 544
Convertible Debt
8.125% Convertible
Senior Notes due
2022 - 139 311
7.5% Convertible
Senior Notes due
2023 - 114 138
Total Unsecured
Debt $ 3,150 $ 2,878 $ 2,674
Total Debt $ 4,400 $ 4,128 $ 4,002
8.5% Convertible
Perpetual
Preferred Stock 265 265 265
7.0% Convertible
Perpetual
Preferred Stock 300 300 278
Total Preferred
Stock $ 565 $ 565 $ 543
Note: All amounts based on par value
(1) Pro forma as of September 30, 2015:
(a) October 8, 2015 buyback & exchange: $100 million unsecured debt
repurchase, $300 million unsecured convertible exchange
(b) Unsecured conversions: $126 million total unsecured debt voluntary
conversions submitted prior to October 31, 2015
(c) Preferred conversions: $22 million of preferred voluntary conversions
(d) Piñon Gathering: Repurchased gathering system for $48 million cash
plus $78 million par value 2(nd) Lien
2015 Operational Guidance
The Company is raising its 2015 production guidance. Additionally, the Company is lowering its LOE, Production Tax and DD&A guidance. Additional 2015 Guidance detail is available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Financial Information/Guidance.
Total Company Mid-Continent
Projection Projection Projection Projection as
as of as of as of of
August 5, November August 5, November 4,
2015 4, 2015 2015 2015
Production
Oil (MMBbls) 9.3 - 10.0 9.3 - 10.0 7.9 - 8.6 7.9 - 8.6
Natural Gas Liquids
(MMBbls) 4.6 - 5.0 4.9 - 5.0 4.5 - 4.9 4.8 - 4.9
13.9 - 14.2 -
Total Liquids (MMBbls) 15.0 15.0 12.4 - 13.5 12.7 - 13.5
90.5 - 91.8 -
Natural Gas (Bcf) 93.5 93.5 78.4 - 81.4 79.7 - 81.4
29.0 - 29.5 -
Total (MMBoe) 30.5 30.5 25.5 - 27.0 26.0 - 27.0
Price Realization
Oil (differential below
NYMEX WTI) $3.75 $3.75
Natural Gas Liquids
(realized % of NYMEX WTI) 30% 30%
Natural Gas (differential
below NYMEX Henry Hub) $0.75 $0.75
Costs per Boe
$11.50 - $10.50 - $8.75 -
Lifting $12.50 $11.50 $9.75 $7.95 - $8.95
0.60 - 0.55 -
Production Taxes 0.80 0.65
11.00 - 10.60 -
DD&A - oil & gas 12.00 10.90
1.75 - 1.65 -
DD&A - other 1.95 1.85
$12.75 - $12.25 -
Total DD&A $13.95 $12.75
3.00 - 3.00 -
G&A - cash 3.50 3.50
0.50 - 0.50 -
G&A - stock 0.75 0.75
$3.50 - $3.50 -
Total G&A $4.25 $4.25
EBITDA from Oilfield
Services and Other ($ in
millions) (1) $10 $10
Adjusted Net Income
Attributable to
Noncontrolling Interest ($
in millions) (2) $60 $60
Adjusted EBITDA Attributable
to Noncontrolling Interest
($ in millions) (3) $90 $90
Capital Expenditures ($ in
millions)
Exploration and Production $612 $612
Land and Geophysical 38 38
Total Exploration and
Production $650 $650
Oil Field Services 5 5
Electrical/Midstream 30 30
General Corporate 15 15
Total Capital Expenditures
(excluding acquisitions) $700 $700
(1) EBITDA from Oilfield Services 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 and Other is Net Income from
Oilfield Services 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.
(2) Adjusted Net Income Attributable to Noncontrolling
Interest is a non-GAAP financial measure as it
excludes gain or loss due to changes in fair value
of 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.
(3) Adjusted EBITDA Attributable to Noncontrolling
Interest is a non-GAAP financial measure as it
excludes from net income interest expense, income
tax expense, depreciation, depletion and
amortization, gain or loss due to changes in fair
value of derivative contracts and gain or loss on
sale of assets. The most directly comparable GAAP
measure for Adjusted EBITDA 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.
Non-GAAP Financial Measures
Adjusted operating cash flow, adjusted EBITDA, pro forma adjusted EBITDA, adjusted net (loss) income, and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.
The Company defines adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities and adjusted for cash paid on financing derivatives. It defines EBITDA as net loss (income) before income tax expense (benefit), interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding asset impairment, interest income, gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, loss (gain) on sale of assets, legal settlements, severance, oil field services -- Permian exit costs, gain on extinguishment of debt and other various items (including non-cash portion of noncontrolling interest and stock-based compensation). Pro forma adjusted EBITDA, as presented herein, is adjusted EBITDA excluding adjusted EBITDA attributable to properties or subsidiaries sold during the period.
Adjusted 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 adjusted 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, adjusted 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) income, which excludes asset impairment, gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, gain on convertible notes derivative liabilities, loss (gain) on sale of assets, severance, oil field services -- Permian exit costs, gain on extinguishment of debt and other non-cash items 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) income 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 asset impairment and (gain) loss on derivative contracts net of cash received (paid) on settlement of derivative contracts 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 supplemental measures of pro forma cash and cash equivalents and pro forma debt as presented herein are cash and cash equivalents and debt adjusted for issuances, repurchases and conversions into common stock of debt subsequent to period end.
The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net (loss) income available to common stockholders, adjusted net income attributable to noncontrolling interest, pro forma cash and cash equivalents and pro forma debt.
Reconciliation of Cash Provided by Operating Activities to
Adjusted Operating Cash Flow
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net cash
provided by
operating
activities $41,892 $164,892 $360,886 $395,684
(Deduct) add
Cash paid on
financing
derivatives - - - (44,128)
Changes in
operating
assets and
liabilities 2,673 37,881 (59,084) 157,615
Adjusted
operating cash
flow $44,565 $202,773 $301,802 $509,171
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Three Months Ended Nine Months Ended September
September 30, 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income $(640,412) $157,338 $(3,043,847) $ (11,892)
Adjusted for
Income tax
expense
(benefit) 25 (1,064) 90 (2,131)
Interest expense 77,501 59,893 214,198 184,234
Depreciation and
amortization -
other 11,379 14,417 37,234 45,350
Depreciation and
depletion - oil
and natural gas 66,501 112,569 266,906 325,021
Accretion of
asset retirement
obligations 1,132 1,116 3,323 7,927
EBITDA (483,874) 344,269 (2,522,096) 548,509
Asset impairment 1,074,588 54 3,647,845 167,966
Interest income (501) (110) (629) (545)
Stock-based
compensation 3,203 3,438 9,294 12,010
Gain on
derivative
contracts (42,211) (132,575) (59,034) (4,792)
Cash received
(paid) upon
settlement of
derivative
contracts (1) 67,258 3,445 278,581 (23,382)
Loss (gain) on
sale of assets 6,771 (995) 2,097 (978)
Legal settlements 5,122 - 4,994 23
Severance 1,290 5 11,819 8,927
Oil field
services -
Permian exit
costs 62 - 4,353 -
Gain on
extinguishment
of debt (340,699) - (358,633) -
Other 935 841 3,676 (322)
Non-cash portion
of
noncontrolling
interest (2) (174,304) 6,594 (561,969) (58,518)
Adjusted EBITDA $ 117,640 $224,966 $ 460,298 $648,898
Less: EBITDA
attributable to
Gulf of Mexico
properties - - - (53,376)
Pro forma adjusted
EBITDA $ 117,640 $224,966 $ 460,298 $595,522
(1) Excludes amounts paid upon early settlement of derivative contracts for
the nine months ended September 30, 2014.
(2) Represents depreciation and depletion, impairment, (gain) loss on
commodity derivative contracts net of cash received (paid) on settlement
and income tax expense attributable to noncontrolling interests.
Reconciliation of Cash Provided by Operating Activities to Adjusted
EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net cash provided
by operating
activities $ 41,892 $164,892 $360,886 $395,684
Changes in
operating assets
and liabilities 2,673 37,881 (59,084) 157,615
Interest expense 77,501 59,893 214,199 184,234
Cash paid on early
settlement of
derivative
contracts - - - 25,434
Cash paid on early
conversion of
convertible
notes 2,709 - 2,709 -
Gain on
convertible notes
derivative
liability 10,146 - 10,146 -
Legal settlements 5,122 - 4,994 23
Severance 1,156 (168) 7,004 6,775
Oil field services
- Permian exit
costs 62 - 4,275 -
Noncontrolling
interest - SDT
(1) (6,619) (5,670) (19,237) (17,361)
Noncontrolling
interest - SDR
(1) (4,918) (9,201) (16,277) (32,251)
Noncontrolling
interest - PER
(1) (6,694) (18,697) (33,212) (58,635)
Noncontrolling
interest - Other
(1) - - - (4)
Other (5,390) (3,964) (16,105) (12,616)
Adjusted EBITDA $117,640 $224,966 $460,298 $648,898
(1) Excludes depreciation and depletion, impairment, (gain) loss on commodity
derivative contracts net of cash received (paid) on settlement and income
tax expense attributable to noncontrolling interests.
Reconciliation of (Loss Applicable) Income Available to Common Stockholders
to Adjusted Net (Loss) Income Available to Common Stockholders
Three Months Ended Nine Months Ended September
September 30, 30,
2015 2014 2015 2014
(in thousands)
(Loss applicable)
income available to
common stockholders $(649,526) $145,957 $(3,070,916) $ (51,036)
Tax benefit
adjustment - (1,160) - (1,160)
Asset impairment (1) 907,834 54 3,127,684 138,093
Gain on derivative
contracts (1) (38,438) (116,719) (53,926) (7,608)
Cash received (paid)
upon settlement of
derivative contracts
(1) 60,342 4,079 249,665 (18,501)
Gain on convertible
notes derivative
liability (10,146) - (10,146) -
Loss (gain) on sale
of assets 6,771 (995) 2,097 (978)
Legal settlements 5,122 - 4,994 23
Severance 1,290 5 11,819 8,927
Oil field services -
Permian exit costs 62 - 4,353 -
Gain on
extinguishment of
debt (340,699) - (358,633) -
Other (160) 305 1,903 (968)
Effect of income
taxes 19 55 76 3,235
Adjusted net (loss)
income available to
common stockholders (57,529) 31,581 (91,030) 70,027
Preferred stock
dividends 9,114 11,381 27,069 39,144
Effect of convertible
debt, net of income
taxes 2,918 - 2,918 -
Total adjusted net
(loss) income $ (45,497) $ 42,962 $ (61,043) $109,171
Weighted average
number of common
shares outstanding
Basic 526,388 485,458 500,077 485,194
Diluted (2) 641,526 575,912 586,424 578,125
Total adjusted net
(loss) income
Per share - basic $ (0.11) $ 0.07 $ (0.18) $ 0.14
Per share - diluted $ (0.07) $ 0.07 $ (0.10) $ 0.19
(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 Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income
attributable to
noncontrolling
interest $(156,073) $40,162 $(493,243) $49,733
Asset impairment 166,754 - 520,161 29,873
(Gain) loss on
derivative
contracts (3,773) (15,856) (5,108) 2,816
Cash received
(paid) on
settlement of
derivative
contracts 6,916 (634) 28,916 (4,881)
Adjusted net
income
attributable to
noncontrolling
interest $ 13,824 $23,672 $ 50,726 $77,541
Pro Forma Cash and Cash Equivalents
September 30,
2015
(in millions)
Cash and cash equivalents $ 790
Acquisition of Piñon Gathering System -
October 2015 (48)
Repurchase of Senior Unsecured Notes - October
2015 (30)
Conversion of Senior Convertible Unsecured Notes
- October 2015 (1) (13)
Pro forma - cash and cash equivalents $ 699
(1) Submitted prior to October 31, 2015
Pro Forma Debt
September 30,
2015
(in millions)
Total debt (par value) $ 4,128
Acquisition of Piñon Gathering System -
October 2015 78
Repurchase of Senior Unsecured Notes (par value)
- October 2015 (100)
Conversion of Senior Convertible Unsecured Notes
(par value) - October 2015 (1)(2) (104)
Pro forma - total debt (par value) $ 4,002
(1) Submitted prior to October 31, 2015
(2) Payments for accrued interest and early
conversion
Conference Call Information
The Company will host a conference call to discuss these results on Thursday, November 5, 2015 at 8:00 am CT. The telephone number to access the conference call from within the U.S. is (877) 201-0168 and from outside the U.S. is (647) 788-4901. The passcode for the call is 43465872. An audio replay of the call will be available from November 5, 2015 until 11:59 pm CT on December 5, 2015. The number to access the conference call replay from within the U.S. is (855) 859-2056 and from outside the U.S. is (404) 537-3406. The passcode for the replay is 43465872.
A live audio webcast of the conference call will also be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Presentations & Events. The webcast will be archived for replay on the Company's website for 30 days.
Fourth Quarter 2015 Earnings Release and Conference Call
February 24, 2016 (Wednesday) -- Earnings press release after market close
February 25, 2016 (Thursday) -- Earnings conference call at 8:00 am CT
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(unaudited)
Revenues
Oil, natural gas and NGL $ 165,135 $359,613 $ 575,399 $1,104,835
Drilling and services 4,572 21,348 19,658 57,280
Midstream and marketing 8,838 11,922 26,208 44,706
Other 1,607 1,224 3,802 5,056
Total revenues 180,152 394,107 625,067 1,211,877
Expenses
Production 72,884 82,664 244,158 256,473
Production taxes 3,652 8,380 12,548 24,027
Cost of sales 4,323 15,992 22,034 38,942
Midstream and marketing 6,633 11,405 22,464 40,659
Depreciation and
depletion - oil and
natural gas 66,501 112,569 266,906 325,021
Depreciation and
amortization - other 11,379 14,417 37,234 45,350
Accretion of asset
retirement obligations 1,132 1,116 3,323 7,927
Impairment 1,074,588 54 3,647,845 167,966
General and
administrative 34,233 24,589 108,764 95,042
Gain on derivative
contracts (42,211) (132,575) (59,034) (4,792)
Loss (gain) on sale of
assets 6,771 (995) 2,097 (978)
Total expenses 1,239,885 137,616 4,308,339 995,637
(Loss) income from
operations (1,059,733) 256,491 (3,683,272) 216,240
Other (expense) income
Interest expense (77,000) (59,783) (213,569) (183,689)
Gain on extinguishment
of debt 340,699 - 358,633 -
Other (expense) income,
net (426) (273) 1,208 3,159
Total other income
(expense) 263,273 (60,056) 146,272 (180,530)
(Loss) income before
income taxes (796,460) 196,435 (3,537,000) 35,710
Income tax expense
(benefit) 25 (1,064) 90 (2,131)
Net (loss) income (796,485) 197,499 (3,537,090) 37,841
Less: net (loss) income
attributable to
noncontrolling
interest (156,073) 40,161 (493,243) 49,733
Net (loss) income
attributable to
SandRidge Energy, Inc. (640,412) 157,338 (3,043,847) (11,892)
Preferred stock dividends 9,114 11,381 27,069 39,144
(Loss applicable)
income available to
SandRidge Energy, Inc. (
SD
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)
common stockholders $ (649,526) $145,957 $(3,070,916) $ (51,036)
(Loss) income per share
Basic $ (1.23) $ 0.30 $ (6.14) $ (0.11)
Diluted $ (1.23) $ 0.27 $ (6.14) $ (0.11)
Weighted average number
of common shares
outstanding
Basic 526,388 485,458 500,077 485,194
Diluted 526,388 575,911 500,077 485,194
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
September 30, December 31,
2015 2014
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 790,142 $ 181,253
Accounts receivable, net 198,205 330,077
Derivative contracts 103,317 291,414
Prepaid expenses 11,308 7,981
Other current assets 6,025 21,193
Total current
assets 1,108,997 831,918
Oil and natural gas properties,
using full cost method of
accounting
Proved 12,302,551 11,707,147
Unproved 260,657 290,596
Less: accumulated depreciation,
depletion and impairment (10,235,369) (6,359,149)
2,327,839 5,638,594
Other property, plant and
equipment, net 507,247 576,463
Derivative contracts 16,249 47,003
Other assets 142,750 165,247
Total assets $ 4,103,082 $ 7,259,225
LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued
expenses $ 445,045 $ 683,392
Derivative contracts 369 -
Deferred tax liability 51,126 95,843
Other current liabilities - 5,216
Total current
liabilities 496,540 784,451
Long-term debt 3,936,994 3,195,436
Derivative contracts 326 -
Asset retirement obligations 58,121 54,402
Other long-term obligations 14,371 15,116
Total liabilities 4,506,352 4,049,405
Commitments and contingencies
Equity
SandRidge Energy, Inc. (
SD
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) stockholders'
(deficit) equity
Preferred stock, $0.001 par value,
50,000 shares authorized
8.5% Convertible perpetual
preferred stock; 2,650 shares
issued and outstanding
at September 30, 2015 and December
31, 2014; aggregate liquidation
preference of $265,000 3 3
7.0% Convertible perpetual
preferred stock; 3,000 shares
issued and outstanding
at September 30, 2015 and December
31, 2014; aggregate liquidation
preference of $300,000 3 3
Common stock, $0.001 par value;
1,800,000 shares authorized,
547,718 issued and
546,157 outstanding at September
30, 2015; 800,000 shares
authorized, 485,932 issued and
484,819 outstanding at December
31, 2014 542 477
Additional paid-in capital 5,270,225 5,204,024
Additional paid-in capital -
stockholder receivable (2,500) (2,500)
Treasury stock, at cost (6,876) (6,980)
Accumulated deficit (6,328,118) (3,257,202)
Total SandRidge
Energy, Inc.
stockholders'
(deficit) equity (1,066,721) 1,937,825
Noncontrolling interest 663,451 1,271,995
Total
stockholders'
(deficit)
equity (403,270) 3,209,820
Total liabilities
and stockholders'
(deficit) equity $ 4,103,082 $ 7,259,225
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended September 30,
2015 2014
(unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) income $(3,537,090) $ 37,841
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities
Depreciation, depletion and
amortization 304,140 370,371
Accretion of asset
retirement obligations 3,323 7,927
Impairment 3,647,845 167,966
Debt issuance costs
amortization 8,324 7,045
Amortization of discount, net
of premium, on long-term
debt 1,053 394
Gain on extinguishment of
debt (358,633) -
Write off of debt issuance
costs 7,108 -
Gain on convertible notes
derivative liability (10,146) -
Cash paid on early conversion
of convertible notes (2,708) -
Gain on derivative contracts (59,034) (4,792)
Cash received (paid) on
settlement of derivative
contracts 278,581 (48,816)
Loss (gain) on sale of
assets 2,097 (978)
Stock-based compensation 15,170 15,853
Other 1,772 488
Changes in operating assets
and liabilities 59,084 (157,615)
Net cash provided by
operating activities 360,886 395,684
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures for
property, plant and
equipment (761,905) (1,071,465)
Acquisitions of assets (3,231) (16,920)
Proceeds from sale of assets 35,387 714,294
Net cash used in investing
activities (729,749) (374,091)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from borrowings 2,190,000 -
Repayments of borrowings (1,034,466) -
Debt issuance costs (48,021) -
Proceeds from the sale of
royalty trust units - 22,119
Noncontrolling interest
distributions (115,301) (150,440)
Acquisition of ownership
interest - (2,730)
Stock-based compensation
excess tax benefit - 14
Purchase of treasury stock (3,198) (8,278)
Repurchase of common stock - (17,542)
Dividends paid - preferred (11,262) (45,025)
Cash paid on settlement of
financing derivative
contracts - (44,128)
Net cash provided by (used
in) financing activities 977,752 (246,010)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 608,889 (224,417)
CASH AND CASH EQUIVALENTS,
beginning of year 181,253 814,663
CASH AND CASH EQUIVALENTS, end
of period $ 790,142 $ 590,246
Supplemental Disclosure of Cash
Flow Information
Cash paid for interest, net of
amounts capitalized $ (213,578) $ (209,939)
Cash paid for income taxes $ (95) $ (543)
Supplemental Disclosure of
Noncash Investing and Financing
Activities
Change in accrued capital
expenditures $ 160,853 $ (49,072)
Equity issued for debt $ (35,147) $ -
Preferred stock dividends paid $ (16,188) $ -
in common stock
For further information, please contact:
Duane M. Grubert
EVP -- Investor Relations and Strategy
SandRidge Energy, Inc. ( SD
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)
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 the Company's corporate strategies, future operations, net income and EBITDA, drilling plans, oil, and natural gas and natural gas liquids production, price realizations and differentials, reserves, operating, general and administrative and other costs, capital expenditures, tax rates, efficiency and cost reduction initiative outcomes, infrastructure utilization and investment, and development plans and appraisal programs. 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 for the year ended December 31, 2014 and in comparable "Risk Factors" sections of our Quarterly Reports on Form 10-Q filed after the date of this press release. 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. ( SD
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) is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth-oriented projects in the Mid- Continent region of the United States. In addition, SandRidge owns and operates a saltwater gathering and disposal system and a drilling and related oil field services business.
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SOURCE SandRidge Energy, Inc. ( SD
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)
/Web site: http://www.sandridgeenergy.com
(END) Dow Jones Newswires (212-416-2800)
11-04-15 1615ET
Copyright (c) 2015 Dow Jones & Company, Inc.
SandRidge Energy 3Q Loss/Shr $1.23 >SD
BY Dow Jones & Company, Inc.
— 4:17 PM ET 11/04/2015
SandRidge Energy, Inc. ( SD
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) Updates Shareholders on Operations and Reports Financial Results for Third Quarter and First Nine Months of 2015
Adjusted EBITDA of $118 Million for the Third Quarter and Adjusted Loss of $0.07 per Diluted Share
Third Quarter Production of 79.9 MBoepd (31% Oil, 17% NGLs)
Raising 2015 Production Guidance Range to 29.5-30.5 MMBoe from 29.0-30.5 MMBoe While Lowering Lifting Costs per Boe Range to $10.50-$11.50 from $11.50-$12.50
Achieved Year End Goal of $2.3 Million per Mississippian Lateral in Third Quarter
Bond Repurchases and Exchanges Address $525 Million of Debt
$1.3 Billion of Liquidity at End of Third Quarter, Including $790 Million in Cash
Events Subsequent to Third Quarter 2015
Agreement to Acquire North Park Basin Niobrara Shale Oil Assets for $190 Million Adds 1.0 MBoepd of Production, 27 MMBoe of Proved Reserves (82% Oil) and Materially Expands Drilling Inventory
Additional Bond Repurchases and Exchanges Address $400 Million of Debt
Acquisition of Piñon Gathering System Eliminates $40 Million of Annual Expenses
Affirmed $500 Million Borrowing Base and Amended Senior Credit Facility
PR Newswire
OKLAHOMA CITY, Nov. 4, 2015
OKLAHOMA CITY, Nov. 4, 2015 /PRNewswire/ -- SandRidge Energy, Inc. ( SD
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) today announced financial and operational results for the quarter ended September 30, 2015. Additionally, presentation slides will be available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Events at 7 am ET on November 5(th) .
The Company had a strong operational quarter, and has both increased 2015 production guidance and decreased 2015 lease operating expense guidance due to positive ongoing production and expense results and the acquisition of the Piñon gathering system. The acquisition eliminates approximately $40 million of expenses annually beginning in November 2015.
As previously announced during and after the third quarter, SandRidge bought back $350 million of unsecured notes for $124 million in cash (36% of par value), creating annual interest expense savings of $27 million. In the transactions, the company also exchanged $575 million of unsecured notes into similar notes convertible into approximately 364 shares of SandRidge common stock per $1,000 of par value of the notes.
After the close of the third quarter, SandRidge entered into a purchase and sales agreement to acquire assets from EE3, LLC, a North Park Basin, Colorado producer consisting of 16 wells producing 1.0 MBoepd with 136,000 net acres of Niobrara Shale oil development potential.
"Our third quarter results featured continued cost control, strong operations, and we drilled eight more extended laterals. We also addressed $925 million of debt through bond repurchases at a steep discount to face value, and additional bond exchange agreements reflecting conversion of debt to equity at a very large premium to our recent share price, making these exchanges extremely accretive to shareholders. In October, we created considerable value by acquiring the Piñon gathering system, reducing annual expenses by approximately $40 million." said James Bennett, SandRidge's Chief Executive Officer and President.
"Topping off the significant and varied activity of recent weeks, our $190 million acquisition of assets in Colorado, which we announced today, gives SandRidge entry into the derisked Niobrara Shale oil play. We intend to allocate significant capital there, taking advantage of our medium depth horizontal drilling and infrastructure management skillsets. Combining continued development of our existing Mid-Continent assets with our new high return Niobrara play, we aim to diversify and improve our overall capital efficiencies. We are visibly capturing balance sheet, operational, and acquisition opportunities to enhance our value proposition to investors."
Drilling and Operational Activities
Mid-Continent: During the third quarter of 2015, SandRidge drilled 31 laterals. The Company averaged six horizontal rigs operating in the play. The Company's Mid-Continent assets produced 70.6 MBoepd during the third quarter (30% oil, 19% NGLs, 51% natural gas).
West Texas: During the third quarter, Permian Basin properties produced approximately 4.2 MBoepd (82% oil, 11% NGLs, 7% natural gas). Legacy West Texas Overthrust properties produced approximately 5.1 MBoepd (99% natural gas, 1% oil).
Operational Highlights
-- Average third quarter production of 79.9 MBoepd, a 10% decrease versus
the second quarter of 2015
-- Achieved $2.3 million per Mississippian lateral cost in the third quarter,
a $700,000, or 23%, reduction from 2014 per lateral costs
-- Spud 14 laterals with multilateral design in the third quarter (8
extended laterals and 6 full section development laterals) with an
average cost of $2.2 million per lateral
-- 19 single Mississippian laterals delivered an average 30-day IP rate of
447 Boepd (51% oil), 127% of Mississippian type curve in the third
quarter
-- 101 multilaterals delivered a cumulative average program to date 90-day
IP rate of 280 Boepd (52% oil), 100% of Mississippian type curve through
the third quarter
-- Reduced Mid-Continent annual LOE guidance by $0.80 per Boe primarily due
to a reduction in power use and generator rentals
Operational Highlights - Subsequent to Third Quarter
As previously announced, the Company acquired the Piñon gathering system, in connection with its West Texas Overthrust properties. Acquisition of this asset eliminates $40 million of annual expenses, beginning in November 2015.
Steve Turk, SandRidge's Chief Operating Officer noted, "The teams delivered strong results averaging 79.9 MBoepd in the third quarter, 70.6 MBoepd from our original Mid-Continent assets. Confidence in our program led to the decision to again raise the lower end of our annual production guidance by 500 MBoe. Ahead of our year end goal, we also achieved an average cost of $2.3 million per Mississippian lateral in the third quarter. New drilling in the quarter consisted of 56% multilaterals from extended lateral development and our improved full section development design, including our first successfully executed 2-mile extended lateral Woodford well. Expanding upon these established capabilities, we are excited about applying the team's proven low cost operations expertise to our newly acquired Niobrara assets in the North Park Basin. We are confident that our experience in medium depth horizontal drilling and our disciplined approach to reducing operating costs will enhance the value of this oily multiple bench shale resource play."
Key Financial Results
Third Quarter
-- Adjusted EBITDA, net of Noncontrolling Interest, was $118 million for
third quarter 2015 compared to $225 million in third quarter 2014
-- Adjusted operating cash flow of $45 million for third quarter 2015
compared to $203 million in third quarter 2014
-- Adjusted net loss of $45 million, or $0.07 per diluted share, for third
quarter 2015 compared to adjusted net income of $43 million, or $0.07 per
diluted share, in third quarter 2014
Nine Months
-- Adjusted EBITDA, net of Noncontrolling Interest, was $460 million in the
first nine months of 2015 compared to $596 million in first nine months
of 2014, pro forma for divestitures
-- Adjusted operating cash flow of $302 million in the first nine months of
2015 compared to $509 million in the first nine months of 2014
-- Adjusted net loss of $61 million, or $0.10 per diluted share, in the
first nine months of 2015 compared to adjusted net income of $109 million,
or $0.19 per diluted share, in the first nine months of 2014
Adjusted net income (loss) available to common stockholders, adjusted EBITDA, pro forma adjusted EBITDA and adjusted 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 10.
Financial / Other Highlights
-- Ended the third quarter with $1.3 billion in liquidity, including $790
million in cash
-- Bond repurchases and exchanges address $525 million of total debt,
retiring $250 million with $94 million in cash (38% of par value) and
exchanging $275 million into debt, convertible into equity
-- Suspension of 7.0% semi-annual preferred stock dividend payment
-- Incurred a non-cash impairment charge of approximately $1.1 billion
primarily due to a ceiling test impairment, resulting from a significant
decline in oil price
Financial / Other Highlights -- Subsequent to Third Quarter
-- Additional bond repurchases and exchanges address $400 million of total
debt, retiring $100 million with $30 million in cash (30% of par value)
and exchanging $300 million into debt, convertible into equity
-- Affirmed $500 million borrowing base and amended credit agreement
allowing for an increase in an amount available for cash repurchase of
senior unsecured notes from $200 million to $275 million
-- As of October 30, 2015, a total principal amount of $126 million in both
2022 and 2023 unsecured convertible notes had voluntarily converted into
common stock
Operational and Financial Statistics
Information regarding the Company's production, pricing, costs and earnings is presented below:
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Production - Total
Oil (MBbl) 2,262 2,644 7,604 7,927
NGL (MBbl) 1,246 1,109 3,883 2,500
Natural gas (MMcf) 23,058 21,501 71,133 62,335
Oil equivalent
(MBoe) 7,351 7,337 23,343 20,816
Daily production
(MBoed) 79.9 79.7 85.5 76.2
Production -
Mid-Continent
Oil (MBbl) 1,938 2,197 6,554 5,849
NGL (MBbl) 1,202 1,063 3,764 2,314
Natural gas (MMcf) 20,128 18,190 62,292 48,704
Oil equivalent
(MBoe) 6,495 6,292 20,700 16,280
Daily production
(MBoed) 70.6 68.4 75.8 59.6
Average price per
unit
Realized oil price
per barrel - as
reported $ 43.33 $ 94.60 $ 47.55 $ 97.12
Realized impact of
derivatives per
barrel 28.85 0.26 32.87 (1.27)
Net realized price
per barrel $ 72.18 $ 94.86 $ 80.42 $ 95.85
Realized NGL price
per barrel - as
reported $ 13.29 $ 35.84 $ 14.69 $ 37.84
Realized impact of
derivatives per
barrel - - - -
Net realized price
per barrel $ 13.29 $ 35.84 $ 14.69 $ 37.84
Realized natural
gas price per Mcf
- as reported $ 2.19 $ 3.24 $ 2.20 $ 3.86
Realized impact of
derivatives per
Mcf 0.09 0.13 0.41 (0.22)
Net realized price
per Mcf $ 2.28 $ 3.37 $ 2.61 $ 3.64
Realized price per
Boe - as reported $ 22.46 $ 49.01 $ 24.65 $ 53.08
Net realized price
per Boe -
including impact
of derivatives $ 31.61 $ 49.48 $ 36.58 $ 51.95
Average cost per
Boe
Lease operating $ 9.91 $ 11.27 $ 10.46 $ 12.32
Production taxes 0.50 1.14 0.54 1.15
General and
administrative
General and
administrative,
excluding
stock-based
compensation $ 4.17 $ 2.77 $ 4.01 $ 3.80
Stock-based
compensation (1) 0.49 0.58 0.65 0.76
Total general and
administrative $ 4.66 $ 3.35 $ 4.66 $ 4.56
General and
administrative -
adjusted
General and
administrative,
excluding
stock-based
compensation (2) $ 3.29 $ 2.76 $ 3.37 $ 3.44
Stock-based
compensation
(1)(3) 0.48 0.55 0.44 0.66
Total general and
administrative -
adjusted $ 3.77 $ 3.31 $ 3.81 $ 4.10
Depletion (4) $ 9.20 $ 15.49 $ 11.58 $ 15.99
Lease operating
cost per Boe
Mid-Continent $ 7.09 $ 8.18 $ 7.75 $ 8.04
Earnings per share
Loss per share
applicable to
common
stockholders
Basic $ (1.23) $ 0.30 $ (6.14) $ (0.11)
Diluted (1.23) 0.27 (6.14) (0.11)
Adjusted net (loss)
income per share
available to common
stockholders
Basic $ (0.11) $ 0.07 $ (0.18) $ 0.14
Diluted (0.07) 0.07 0.10 0.19
Weighted average
number of common
shares outstanding
(in thousands)
Basic 526,388 485,458 500,077 485,194
Diluted (5) 641,526 575,912 586,424 578,125
(1) Expense for equity-classified stock-based awards.
(2) Excludes severance, legal settlements and shareholder litigation costs
totaling $6.4 million and $14.9 million for the three and nine-month
periods ended September 30, 2015, respectively. Excludes severance,
transaction costs and shareholder litigation costs totaling $0.1 million
and $7.5 million for the three and nine-month periods ended September 30,
2014, respectively.
(3) Three and nine-month periods ended September 30, 2015 exclude $0.1
million and $4.8 million, respectively, for the acceleration of certain
stock awards. Three and nine-month periods ended September 30, 2014
exclude $0.2 million and $2.2 million, respectively, 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.
Capital Expenditures
The table below summarizes the Company's capital expenditures for the three and nine-month periods ended September 30, 2015 and 2014:
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Drilling and
production
Mid-Continent $ 87,183 $336,171 $511,789 $ 743,059
Permian Basin 675 49,314 4,257 155,788
Gulf of
Mexico/Gulf
Coast - - - 22,975
87,858 385,485 516,046 921,822
Leasehold and
geophysical
Mid-Continent 15,848 47,260 42,434 127,296
Gulf of
Mexico/Gulf
Coast - - - 159
Other 651 2,340 4,391 7,990
16,499 49,600 46,825 135,445
Inventory 1,656 674 (3,356) (728)
Total exploration
and development 106,013 435,759 559,515 1,056,539
Drilling and oil
field services 259 3,603 2,732 10,877
Midstream 3,719 14,045 20,400 25,810
Other - general 3,306 14,422 18,405 27,311
Total capital
expenditures,
excluding
acquisitions 113,297 467,829 601,052 1,120,537
Acquisitions (244) 367 3,231 16,920
Total capital
expenditures $113,053 $468,196 $604,283 $1,137,457
Derivative Contracts
The table below sets forth the Company's consolidated oil and natural gas price swaps and collars for the years 2015 and 2016 as of November 4, 2015:
Quarter Ending
3/31/2015 6/30/2015 9/30/2015 12/31/2015 FY2015
Oil (MMBbls)
Swap Volume 2.29 1.73 1.01 0.55 5.59
Swap $92.71 $91.55 $92.43 $94.11 $92.44
Three-way
Collar Volume 0.72 0.73 1.56 1.56 4.58
Call Price $103.13 $103.13 $103.65 $103.65 $103.48
Put Price $90.82 $90.82 $90.03 $90.03 $90.28
Short Put
Price $73.13 $73.13 $78.15 $78.15 $76.56
Natural Gas
(Bcf)
Swap Volume 14.40 1.82 1.84 1.84 19.90
Swap $4.62 $4.20 $4.20 $4.20 $4.51
Collar Volume 0.25 0.25 0.25 0.25 1.01
Collar: High $8.55 $8.55 $8.55 $8.55 $8.55
Collar: Low $4.00 $4.00 $4.00 $4.00 $4.00
Natural Gas
Basis (Bcf)
Swap Volume 9.65 15.47 15.64 15.64 56.40
Swap (0.29) (0.30) (0.30) (0.30) (0.30)
Quarter Ending
3/31/2016 6/30/2016 9/30/2016 12/31/2016 FY2016
Oil (MMBbls)
Swap Volume 0.36 0.36 0.37 0.37 1.46
Swap $88.36 $88.36 $88.36 $88.36 $88.36
Three-way
Collar Volume 0.91 0.91 0.37 0.37 2.56
Call Price $101.35 $101.35 $99.63 $99.63 $100.85
Put Price $90.00 $90.00 $90.00 $90.00 $90.00
Short Put
Price $83.39 $83.39 $82.50 $82.50 $83.14
Natural Gas
(Bcf)
Swap Volume - - - - -
Swap - - - - -
Collar Volume - - - - -
Collar: High - - - - -
Collar: Low - - - - -
Natural Gas
Basis (Bcf)
Swap Volume 2.73 2.73 2.76 2.76 10.98
Swap (0.38) (0.38) (0.38) (0.38) (0.38)
Balance Sheet
The Company's capital structure at September 30, 2015 and December 31, 2014 is presented below:
September 30, December 31,
2015 2014
(in thousands)
Cash and cash equivalents $ 790,142 $ 181,253
Current maturities of long-term debt $ - $ -
Long-term debt (net of current
maturities)
8.75% Senior Secured Notes due 2020 1,250,000 -
Senior Unsecured Notes
8.75% Senior Notes due 2020, net 401,149 445,402
7.5% Senior Notes due 2021 996,309 1,178,486
8.125% Senior Notes due 2022 601,187 750,000
7.5% Senior Notes due 2023, net 622,923 821,548
Convertible Senior Unsecured Notes
8.125% Convertible Senior Notes due
2022, net 36,406 -
7.5% Convertible Senior Notes due
2023, net 29,020 -
Total debt 3,936,994 3,195,436
Stockholders' (deficit) equity
Preferred stock 6 6
Common stock 542 477
Additional paid-in capital 5,267,725 5,201,524
Treasury stock, at cost (6,876) (6,980)
Accumulated deficit (6,328,118) (3,257,202)
Total SandRidge Energy, Inc.
stockholders' (deficit) equity (1,066,721) 1,937,825
Noncontrolling interest 663,451 1,271,995
Total capitalization $ 3,533,724 $ 6,405,256
Pro Forma Capitalization
The Company's capital structure at September 30, 2015, pro forma for subsequent events and based on par values is presented below:
Actual as of Actual as of Pro forma (1)
June 30, 2015 September 30, 2015 September 30, 2015
(in millions)
Cash $ 984 $ 790 $ 699
$500 million
Revolving Credit
Facility (undrawn) - - -
8.75% Senior
Secured 2(nd)
Lien Notes due
2020 1,250 1,250 1,328
Total Secured Debt $ 1,250 $ 1,250 $ 1,328
Unsecured Debt
8.75% Senior Notes
due 2020 450 405 396
7.5% Senior Notes
due 2021 1,146 994 758
8.125% Senior
Notes due 2022 729 601 528
7.5% Senior Notes
due 2023 825 625 544
Convertible Debt
8.125% Convertible
Senior Notes due
2022 - 139 311
7.5% Convertible
Senior Notes due
2023 - 114 138
Total Unsecured
Debt $ 3,150 $ 2,878 $ 2,674
Total Debt $ 4,400 $ 4,128 $ 4,002
8.5% Convertible
Perpetual
Preferred Stock 265 265 265
7.0% Convertible
Perpetual
Preferred Stock 300 300 278
Total Preferred
Stock $ 565 $ 565 $ 543
Note: All amounts based on par value
(1) Pro forma as of September 30, 2015:
(a) October 8, 2015 buyback & exchange: $100 million unsecured debt
repurchase, $300 million unsecured convertible exchange
(b) Unsecured conversions: $126 million total unsecured debt voluntary
conversions submitted prior to October 31, 2015
(c) Preferred conversions: $22 million of preferred voluntary conversions
(d) Piñon Gathering: Repurchased gathering system for $48 million cash
plus $78 million par value 2(nd) Lien
2015 Operational Guidance
The Company is raising its 2015 production guidance. Additionally, the Company is lowering its LOE, Production Tax and DD&A guidance. Additional 2015 Guidance detail is available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Financial Information/Guidance.
Total Company Mid-Continent
Projection Projection Projection Projection as
as of as of as of of
August 5, November August 5, November 4,
2015 4, 2015 2015 2015
Production
Oil (MMBbls) 9.3 - 10.0 9.3 - 10.0 7.9 - 8.6 7.9 - 8.6
Natural Gas Liquids
(MMBbls) 4.6 - 5.0 4.9 - 5.0 4.5 - 4.9 4.8 - 4.9
13.9 - 14.2 -
Total Liquids (MMBbls) 15.0 15.0 12.4 - 13.5 12.7 - 13.5
90.5 - 91.8 -
Natural Gas (Bcf) 93.5 93.5 78.4 - 81.4 79.7 - 81.4
29.0 - 29.5 -
Total (MMBoe) 30.5 30.5 25.5 - 27.0 26.0 - 27.0
Price Realization
Oil (differential below
NYMEX WTI) $3.75 $3.75
Natural Gas Liquids
(realized % of NYMEX WTI) 30% 30%
Natural Gas (differential
below NYMEX Henry Hub) $0.75 $0.75
Costs per Boe
$11.50 - $10.50 - $8.75 -
Lifting $12.50 $11.50 $9.75 $7.95 - $8.95
0.60 - 0.55 -
Production Taxes 0.80 0.65
11.00 - 10.60 -
DD&A - oil & gas 12.00 10.90
1.75 - 1.65 -
DD&A - other 1.95 1.85
$12.75 - $12.25 -
Total DD&A $13.95 $12.75
3.00 - 3.00 -
G&A - cash 3.50 3.50
0.50 - 0.50 -
G&A - stock 0.75 0.75
$3.50 - $3.50 -
Total G&A $4.25 $4.25
EBITDA from Oilfield
Services and Other ($ in
millions) (1) $10 $10
Adjusted Net Income
Attributable to
Noncontrolling Interest ($
in millions) (2) $60 $60
Adjusted EBITDA Attributable
to Noncontrolling Interest
($ in millions) (3) $90 $90
Capital Expenditures ($ in
millions)
Exploration and Production $612 $612
Land and Geophysical 38 38
Total Exploration and
Production $650 $650
Oil Field Services 5 5
Electrical/Midstream 30 30
General Corporate 15 15
Total Capital Expenditures
(excluding acquisitions) $700 $700
(1) EBITDA from Oilfield Services 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 and Other is Net Income from
Oilfield Services 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.
(2) Adjusted Net Income Attributable to Noncontrolling
Interest is a non-GAAP financial measure as it
excludes gain or loss due to changes in fair value
of 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.
(3) Adjusted EBITDA Attributable to Noncontrolling
Interest is a non-GAAP financial measure as it
excludes from net income interest expense, income
tax expense, depreciation, depletion and
amortization, gain or loss due to changes in fair
value of derivative contracts and gain or loss on
sale of assets. The most directly comparable GAAP
measure for Adjusted EBITDA 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.
Non-GAAP Financial Measures
Adjusted operating cash flow, adjusted EBITDA, pro forma adjusted EBITDA, adjusted net (loss) income, and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.
The Company defines adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities and adjusted for cash paid on financing derivatives. It defines EBITDA as net loss (income) before income tax expense (benefit), interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding asset impairment, interest income, gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, loss (gain) on sale of assets, legal settlements, severance, oil field services -- Permian exit costs, gain on extinguishment of debt and other various items (including non-cash portion of noncontrolling interest and stock-based compensation). Pro forma adjusted EBITDA, as presented herein, is adjusted EBITDA excluding adjusted EBITDA attributable to properties or subsidiaries sold during the period.
Adjusted 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 adjusted 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, adjusted 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) income, which excludes asset impairment, gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, gain on convertible notes derivative liabilities, loss (gain) on sale of assets, severance, oil field services -- Permian exit costs, gain on extinguishment of debt and other non-cash items 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) income 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 asset impairment and (gain) loss on derivative contracts net of cash received (paid) on settlement of derivative contracts 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 supplemental measures of pro forma cash and cash equivalents and pro forma debt as presented herein are cash and cash equivalents and debt adjusted for issuances, repurchases and conversions into common stock of debt subsequent to period end.
The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net (loss) income available to common stockholders, adjusted net income attributable to noncontrolling interest, pro forma cash and cash equivalents and pro forma debt.
Reconciliation of Cash Provided by Operating Activities to
Adjusted Operating Cash Flow
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net cash
provided by
operating
activities $41,892 $164,892 $360,886 $395,684
(Deduct) add
Cash paid on
financing
derivatives - - - (44,128)
Changes in
operating
assets and
liabilities 2,673 37,881 (59,084) 157,615
Adjusted
operating cash
flow $44,565 $202,773 $301,802 $509,171
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Three Months Ended Nine Months Ended September
September 30, 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income $(640,412) $157,338 $(3,043,847) $ (11,892)
Adjusted for
Income tax
expense
(benefit) 25 (1,064) 90 (2,131)
Interest expense 77,501 59,893 214,198 184,234
Depreciation and
amortization -
other 11,379 14,417 37,234 45,350
Depreciation and
depletion - oil
and natural gas 66,501 112,569 266,906 325,021
Accretion of
asset retirement
obligations 1,132 1,116 3,323 7,927
EBITDA (483,874) 344,269 (2,522,096) 548,509
Asset impairment 1,074,588 54 3,647,845 167,966
Interest income (501) (110) (629) (545)
Stock-based
compensation 3,203 3,438 9,294 12,010
Gain on
derivative
contracts (42,211) (132,575) (59,034) (4,792)
Cash received
(paid) upon
settlement of
derivative
contracts (1) 67,258 3,445 278,581 (23,382)
Loss (gain) on
sale of assets 6,771 (995) 2,097 (978)
Legal settlements 5,122 - 4,994 23
Severance 1,290 5 11,819 8,927
Oil field
services -
Permian exit
costs 62 - 4,353 -
Gain on
extinguishment
of debt (340,699) - (358,633) -
Other 935 841 3,676 (322)
Non-cash portion
of
noncontrolling
interest (2) (174,304) 6,594 (561,969) (58,518)
Adjusted EBITDA $ 117,640 $224,966 $ 460,298 $648,898
Less: EBITDA
attributable to
Gulf of Mexico
properties - - - (53,376)
Pro forma adjusted
EBITDA $ 117,640 $224,966 $ 460,298 $595,522
(1) Excludes amounts paid upon early settlement of derivative contracts for
the nine months ended September 30, 2014.
(2) Represents depreciation and depletion, impairment, (gain) loss on
commodity derivative contracts net of cash received (paid) on settlement
and income tax expense attributable to noncontrolling interests.
Reconciliation of Cash Provided by Operating Activities to Adjusted
EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net cash provided
by operating
activities $ 41,892 $164,892 $360,886 $395,684
Changes in
operating assets
and liabilities 2,673 37,881 (59,084) 157,615
Interest expense 77,501 59,893 214,199 184,234
Cash paid on early
settlement of
derivative
contracts - - - 25,434
Cash paid on early
conversion of
convertible
notes 2,709 - 2,709 -
Gain on
convertible notes
derivative
liability 10,146 - 10,146 -
Legal settlements 5,122 - 4,994 23
Severance 1,156 (168) 7,004 6,775
Oil field services
- Permian exit
costs 62 - 4,275 -
Noncontrolling
interest - SDT
(1) (6,619) (5,670) (19,237) (17,361)
Noncontrolling
interest - SDR
(1) (4,918) (9,201) (16,277) (32,251)
Noncontrolling
interest - PER
(1) (6,694) (18,697) (33,212) (58,635)
Noncontrolling
interest - Other
(1) - - - (4)
Other (5,390) (3,964) (16,105) (12,616)
Adjusted EBITDA $117,640 $224,966 $460,298 $648,898
(1) Excludes depreciation and depletion, impairment, (gain) loss on commodity
derivative contracts net of cash received (paid) on settlement and income
tax expense attributable to noncontrolling interests.
Reconciliation of (Loss Applicable) Income Available to Common Stockholders
to Adjusted Net (Loss) Income Available to Common Stockholders
Three Months Ended Nine Months Ended September
September 30, 30,
2015 2014 2015 2014
(in thousands)
(Loss applicable)
income available to
common stockholders $(649,526) $145,957 $(3,070,916) $ (51,036)
Tax benefit
adjustment - (1,160) - (1,160)
Asset impairment (1) 907,834 54 3,127,684 138,093
Gain on derivative
contracts (1) (38,438) (116,719) (53,926) (7,608)
Cash received (paid)
upon settlement of
derivative contracts
(1) 60,342 4,079 249,665 (18,501)
Gain on convertible
notes derivative
liability (10,146) - (10,146) -
Loss (gain) on sale
of assets 6,771 (995) 2,097 (978)
Legal settlements 5,122 - 4,994 23
Severance 1,290 5 11,819 8,927
Oil field services -
Permian exit costs 62 - 4,353 -
Gain on
extinguishment of
debt (340,699) - (358,633) -
Other (160) 305 1,903 (968)
Effect of income
taxes 19 55 76 3,235
Adjusted net (loss)
income available to
common stockholders (57,529) 31,581 (91,030) 70,027
Preferred stock
dividends 9,114 11,381 27,069 39,144
Effect of convertible
debt, net of income
taxes 2,918 - 2,918 -
Total adjusted net
(loss) income $ (45,497) $ 42,962 $ (61,043) $109,171
Weighted average
number of common
shares outstanding
Basic 526,388 485,458 500,077 485,194
Diluted (2) 641,526 575,912 586,424 578,125
Total adjusted net
(loss) income
Per share - basic $ (0.11) $ 0.07 $ (0.18) $ 0.14
Per share - diluted $ (0.07) $ 0.07 $ (0.10) $ 0.19
(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 Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income
attributable to
noncontrolling
interest $(156,073) $40,162 $(493,243) $49,733
Asset impairment 166,754 - 520,161 29,873
(Gain) loss on
derivative
contracts (3,773) (15,856) (5,108) 2,816
Cash received
(paid) on
settlement of
derivative
contracts 6,916 (634) 28,916 (4,881)
Adjusted net
income
attributable to
noncontrolling
interest $ 13,824 $23,672 $ 50,726 $77,541
Pro Forma Cash and Cash Equivalents
September 30,
2015
(in millions)
Cash and cash equivalents $ 790
Acquisition of Piñon Gathering System -
October 2015 (48)
Repurchase of Senior Unsecured Notes - October
2015 (30)
Conversion of Senior Convertible Unsecured Notes
- October 2015 (1) (13)
Pro forma - cash and cash equivalents $ 699
(1) Submitted prior to October 31, 2015
Pro Forma Debt
September 30,
2015
(in millions)
Total debt (par value) $ 4,128
Acquisition of Piñon Gathering System -
October 2015 78
Repurchase of Senior Unsecured Notes (par value)
- October 2015 (100)
Conversion of Senior Convertible Unsecured Notes
(par value) - October 2015 (1)(2) (104)
Pro forma - total debt (par value) $ 4,002
(1) Submitted prior to October 31, 2015
(2) Payments for accrued interest and early
conversion
Conference Call Information
The Company will host a conference call to discuss these results on Thursday, November 5, 2015 at 8:00 am CT. The telephone number to access the conference call from within the U.S. is (877) 201-0168 and from outside the U.S. is (647) 788-4901. The passcode for the call is 43465872. An audio replay of the call will be available from November 5, 2015 until 11:59 pm CT on December 5, 2015. The number to access the conference call replay from within the U.S. is (855) 859-2056 and from outside the U.S. is (404) 537-3406. The passcode for the replay is 43465872.
A live audio webcast of the conference call will also be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Presentations & Events. The webcast will be archived for replay on the Company's website for 30 days.
Fourth Quarter 2015 Earnings Release and Conference Call
February 24, 2016 (Wednesday) -- Earnings press release after market close
February 25, 2016 (Thursday) -- Earnings conference call at 8:00 am CT
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(unaudited)
Revenues
Oil, natural gas and NGL $ 165,135 $359,613 $ 575,399 $1,104,835
Drilling and services 4,572 21,348 19,658 57,280
Midstream and marketing 8,838 11,922 26,208 44,706
Other 1,607 1,224 3,802 5,056
Total revenues 180,152 394,107 625,067 1,211,877
Expenses
Production 72,884 82,664 244,158 256,473
Production taxes 3,652 8,380 12,548 24,027
Cost of sales 4,323 15,992 22,034 38,942
Midstream and marketing 6,633 11,405 22,464 40,659
Depreciation and
depletion - oil and
natural gas 66,501 112,569 266,906 325,021
Depreciation and
amortization - other 11,379 14,417 37,234 45,350
Accretion of asset
retirement obligations 1,132 1,116 3,323 7,927
Impairment 1,074,588 54 3,647,845 167,966
General and
administrative 34,233 24,589 108,764 95,042
Gain on derivative
contracts (42,211) (132,575) (59,034) (4,792)
Loss (gain) on sale of
assets 6,771 (995) 2,097 (978)
Total expenses 1,239,885 137,616 4,308,339 995,637
(Loss) income from
operations (1,059,733) 256,491 (3,683,272) 216,240
Other (expense) income
Interest expense (77,000) (59,783) (213,569) (183,689)
Gain on extinguishment
of debt 340,699 - 358,633 -
Other (expense) income,
net (426) (273) 1,208 3,159
Total other income
(expense) 263,273 (60,056) 146,272 (180,530)
(Loss) income before
income taxes (796,460) 196,435 (3,537,000) 35,710
Income tax expense
(benefit) 25 (1,064) 90 (2,131)
Net (loss) income (796,485) 197,499 (3,537,090) 37,841
Less: net (loss) income
attributable to
noncontrolling
interest (156,073) 40,161 (493,243) 49,733
Net (loss) income
attributable to
SandRidge Energy, Inc. (640,412) 157,338 (3,043,847) (11,892)
Preferred stock dividends 9,114 11,381 27,069 39,144
(Loss applicable)
income available to
SandRidge Energy, Inc. (
SD
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)
common stockholders $ (649,526) $145,957 $(3,070,916) $ (51,036)
(Loss) income per share
Basic $ (1.23) $ 0.30 $ (6.14) $ (0.11)
Diluted $ (1.23) $ 0.27 $ (6.14) $ (0.11)
Weighted average number
of common shares
outstanding
Basic 526,388 485,458 500,077 485,194
Diluted 526,388 575,911 500,077 485,194
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
September 30, December 31,
2015 2014
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 790,142 $ 181,253
Accounts receivable, net 198,205 330,077
Derivative contracts 103,317 291,414
Prepaid expenses 11,308 7,981
Other current assets 6,025 21,193
Total current
assets 1,108,997 831,918
Oil and natural gas properties,
using full cost method of
accounting
Proved 12,302,551 11,707,147
Unproved 260,657 290,596
Less: accumulated depreciation,
depletion and impairment (10,235,369) (6,359,149)
2,327,839 5,638,594
Other property, plant and
equipment, net 507,247 576,463
Derivative contracts 16,249 47,003
Other assets 142,750 165,247
Total assets $ 4,103,082 $ 7,259,225
LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued
expenses $ 445,045 $ 683,392
Derivative contracts 369 -
Deferred tax liability 51,126 95,843
Other current liabilities - 5,216
Total current
liabilities 496,540 784,451
Long-term debt 3,936,994 3,195,436
Derivative contracts 326 -
Asset retirement obligations 58,121 54,402
Other long-term obligations 14,371 15,116
Total liabilities 4,506,352 4,049,405
Commitments and contingencies
Equity
SandRidge Energy, Inc. (
SD
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) stockholders'
(deficit) equity
Preferred stock, $0.001 par value,
50,000 shares authorized
8.5% Convertible perpetual
preferred stock; 2,650 shares
issued and outstanding
at September 30, 2015 and December
31, 2014; aggregate liquidation
preference of $265,000 3 3
7.0% Convertible perpetual
preferred stock; 3,000 shares
issued and outstanding
at September 30, 2015 and December
31, 2014; aggregate liquidation
preference of $300,000 3 3
Common stock, $0.001 par value;
1,800,000 shares authorized,
547,718 issued and
546,157 outstanding at September
30, 2015; 800,000 shares
authorized, 485,932 issued and
484,819 outstanding at December
31, 2014 542 477
Additional paid-in capital 5,270,225 5,204,024
Additional paid-in capital -
stockholder receivable (2,500) (2,500)
Treasury stock, at cost (6,876) (6,980)
Accumulated deficit (6,328,118) (3,257,202)
Total SandRidge
Energy, Inc.
stockholders'
(deficit) equity (1,066,721) 1,937,825
Noncontrolling interest 663,451 1,271,995
Total
stockholders'
(deficit)
equity (403,270) 3,209,820
Total liabilities
and stockholders'
(deficit) equity $ 4,103,082 $ 7,259,225
SandRidge Energy, Inc. (
SD
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) and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended September 30,
2015 2014
(unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) income $(3,537,090) $ 37,841
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities
Depreciation, depletion and
amortization 304,140 370,371
Accretion of asset
retirement obligations 3,323 7,927
Impairment 3,647,845 167,966
Debt issuance costs
amortization 8,324 7,045
Amortization of discount, net
of premium, on long-term
debt 1,053 394
Gain on extinguishment of
debt (358,633) -
Write off of debt issuance
costs 7,108 -
Gain on convertible notes
derivative liability (10,146) -
Cash paid on early conversion
of convertible notes (2,708) -
Gain on derivative contracts (59,034) (4,792)
Cash received (paid) on
settlement of derivative
contracts 278,581 (48,816)
Loss (gain) on sale of
assets 2,097 (978)
Stock-based compensation 15,170 15,853
Other 1,772 488
Changes in operating assets
and liabilities 59,084 (157,615)
Net cash provided by
operating activities 360,886 395,684
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures for
property, plant and
equipment (761,905) (1,071,465)
Acquisitions of assets (3,231) (16,920)
Proceeds from sale of assets 35,387 714,294
Net cash used in investing
activities (729,749) (374,091)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from borrowings 2,190,000 -
Repayments of borrowings (1,034,466) -
Debt issuance costs (48,021) -
Proceeds from the sale of
royalty trust units - 22,119
Noncontrolling interest
distributions (115,301) (150,440)
Acquisition of ownership
interest - (2,730)
Stock-based compensation
excess tax benefit - 14
Purchase of treasury stock (3,198) (8,278)
Repurchase of common stock - (17,542)
Dividends paid - preferred (11,262) (45,025)
Cash paid on settlement of
financing derivative
contracts - (44,128)
Net cash provided by (used
in) financing activities 977,752 (246,010)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 608,889 (224,417)
CASH AND CASH EQUIVALENTS,
beginning of year 181,253 814,663
CASH AND CASH EQUIVALENTS, end
of period $ 790,142 $ 590,246
Supplemental Disclosure of Cash
Flow Information
Cash paid for interest, net of
amounts capitalized $ (213,578) $ (209,939)
Cash paid for income taxes $ (95) $ (543)
Supplemental Disclosure of
Noncash Investing and Financing
Activities
Change in accrued capital
expenditures $ 160,853 $ (49,072)
Equity issued for debt $ (35,147) $ -
Preferred stock dividends paid $ (16,188) $ -
in common stock
For further information, please contact:
Duane M. Grubert
EVP -- Investor Relations and Strategy
SandRidge Energy, Inc. ( SD
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)
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 the Company's corporate strategies, future operations, net income and EBITDA, drilling plans, oil, and natural gas and natural gas liquids production, price realizations and differentials, reserves, operating, general and administrative and other costs, capital expenditures, tax rates, efficiency and cost reduction initiative outcomes, infrastructure utilization and investment, and development plans and appraisal programs. 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 for the year ended December 31, 2014 and in comparable "Risk Factors" sections of our Quarterly Reports on Form 10-Q filed after the date of this press release. 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. ( SD
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) is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth-oriented projects in the Mid- Continent region of the United States. In addition, SandRidge owns and operates a saltwater gathering and disposal system and a drilling and related oil field services business.
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SOURCE SandRidge Energy, Inc. ( SD
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/Web site: http://www.sandridgeenergy.com
(END) Dow Jones Newswires (212-416-2800)
11-04-15 1615ET
Copyright (c) 2015 Dow Jones & Company, Inc.
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