SD
Earnings and an Acquisition Send SandRidge Energy Inc's Stock Soaring
Investors cheer the fact that this oil and gas company is diversifying.
Matthew DiLallo (TMFmd19) Nov 5, 2015 at 11:58AM
Longview
What: Shares of SandRidge Energy (NYSE:SD) rebounded sharply on Thursday, up nearly 18% at one point in early-morning trading. Twin fuels drove the surge, with the company reporting better-than-expected third-quarter results and announcing a new acquisition.
So what: SandRidge Energy reported a narrower loss than expected after the company lost $0.07 per share, which was $0.05 per share less than the consensus estimate. Driving this result were lower lease operating costs, which fell from $11.27 per barrel of oil equivalent, or BOE, in the year-ago quarter to $9.91 per BOE during the third quarter.
In addition, SandRidge also increased its full-year production guidance to a range of 29.5 million-30.5 million BOE from 29 million-30.5 million BOE. Furthermore, the company also achieved its year-end Mid-Continent well cost target of $2.3 million during the third quarter, which is 23% lower than last year's cost.
Finally, the company announced the acquisition of 136,000 acres in the North Park Basin Niobrara Shale of Colorado. This is a pure developmental play with limited current production, though it is derisked after the seller and EOG Resources (NYSE:EOG) saw strong initial production rates on the last six wells drilled. Furthermore, it is also worth noting that EOG Resources has spoken highly of this play in the past, which bodes well for SandRidge in the future. However, at the moment it isn't high up on EOG Resources' priority list because it earns higher returns elsewhere in its portfolio. That said, SandRidge does't have quite as rich a portfolio as EOG, and therefore it has a much higher view of this play, having identified more than 1,300 future well locations, which is a 10-year drilling inventory. These are very economical wells for SandRidge and are expected to earn a 32% internal rate of return at the current future projected price of oil. Thus SandRidge expects this asset to be an important part of its plans in 2016 and beyond.
Now what: SandRidge Energy made a lot of progress during the quarter to become a more efficient operator in the low-oil-price environment. It's hoping to take those efficiencies over to a new basin, in an effort to drive strong returns during the currently tough operating environment. That said, it still does have a tough road ahead of it, with the company continuing to lose money, which will be tough to reverse until oil prices rebound.
What Tim Cook Didn't Tell You
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-the-know investors! To be one of them, just click here.
Matt DiLallo owns shares of SandRidge Energy. The Motley Fool owns shares of EOG Resources,. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Forget the iPhone 6. Next Apple Sensation Leaked
Forget the iPhone and the Apple Watch. Another revolutionary Apple technology is booming. According to Gartner Research, the market for this technology will soon be worth a whopping $721 billion!
But you won't hear about this game-changer in front page headlines. Peeking under the hood reveals a more intriguing story about a little-known company that has cornered the market for the technology hidden in Apple's devices. Simply click here to learn its name.
COMPARE BROKERS
AUTHOR
Matthew DiLallo
Fool Contributor
Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:
Investors cheer the fact that this oil and gas company is diversifying.
Matthew DiLallo (TMFmd19) Nov 5, 2015 at 11:58AM
Longview
What: Shares of SandRidge Energy (NYSE:SD) rebounded sharply on Thursday, up nearly 18% at one point in early-morning trading. Twin fuels drove the surge, with the company reporting better-than-expected third-quarter results and announcing a new acquisition.
So what: SandRidge Energy reported a narrower loss than expected after the company lost $0.07 per share, which was $0.05 per share less than the consensus estimate. Driving this result were lower lease operating costs, which fell from $11.27 per barrel of oil equivalent, or BOE, in the year-ago quarter to $9.91 per BOE during the third quarter.
In addition, SandRidge also increased its full-year production guidance to a range of 29.5 million-30.5 million BOE from 29 million-30.5 million BOE. Furthermore, the company also achieved its year-end Mid-Continent well cost target of $2.3 million during the third quarter, which is 23% lower than last year's cost.
Finally, the company announced the acquisition of 136,000 acres in the North Park Basin Niobrara Shale of Colorado. This is a pure developmental play with limited current production, though it is derisked after the seller and EOG Resources (NYSE:EOG) saw strong initial production rates on the last six wells drilled. Furthermore, it is also worth noting that EOG Resources has spoken highly of this play in the past, which bodes well for SandRidge in the future. However, at the moment it isn't high up on EOG Resources' priority list because it earns higher returns elsewhere in its portfolio. That said, SandRidge does't have quite as rich a portfolio as EOG, and therefore it has a much higher view of this play, having identified more than 1,300 future well locations, which is a 10-year drilling inventory. These are very economical wells for SandRidge and are expected to earn a 32% internal rate of return at the current future projected price of oil. Thus SandRidge expects this asset to be an important part of its plans in 2016 and beyond.
Now what: SandRidge Energy made a lot of progress during the quarter to become a more efficient operator in the low-oil-price environment. It's hoping to take those efficiencies over to a new basin, in an effort to drive strong returns during the currently tough operating environment. That said, it still does have a tough road ahead of it, with the company continuing to lose money, which will be tough to reverse until oil prices rebound.
What Tim Cook Didn't Tell You
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-the-know investors! To be one of them, just click here.
Matt DiLallo owns shares of SandRidge Energy. The Motley Fool owns shares of EOG Resources,. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Forget the iPhone 6. Next Apple Sensation Leaked
Forget the iPhone and the Apple Watch. Another revolutionary Apple technology is booming. According to Gartner Research, the market for this technology will soon be worth a whopping $721 billion!
But you won't hear about this game-changer in front page headlines. Peeking under the hood reveals a more intriguing story about a little-known company that has cornered the market for the technology hidden in Apple's devices. Simply click here to learn its name.
COMPARE BROKERS
AUTHOR
Matthew DiLallo
Fool Contributor
Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:
