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SandRidge Energy, Inc. has announced that it is entering into transactions which will increase current liquidity to approximately $1.4 billion, including a revised revolving bank credit facility containing leverage covenants that are less restrictive than under its current credit facility and a private offering of $1.25 billion of senior secured second lien notes.
Pricing detail of the $1.25 billion private offering of Second-Lien Notes has been previously disclosed by the Company.
The Company will, concurrently with the issuance of its Second Lien Notes, revise its first lien credit facility, lowering its initial borrowing base availability from its current $900 million to $500 million, subject to maintenance of a first lien leverage ratio of not more than 2.0 times (senior first lien secured debt/ LTM pro forma EBITDA) and a minimum current ratio (including available borrowing capacity) of at least 1.0 times.
James Bennett, Chief Executive Officer and President commented: "Given our strategic goal of improving capital efficiency in our project portfolio to counter ongoing commodity price weakness, we have actively explored opportunities to enhance the financial strength of the Company. We are very pleased to announce the pricing of our Second Lien Notes offering and the revision of our revolving bank credit facility, which we believe will provide us the flexibility and liquidity that lets us continue to develop and produce our attractive asset base and create shareholder value. We have also recently exchanged $50 million principal of our unsecured senior notes for common equity at a material discount to the face value of the debt, and will continue to pursue other deleveraging transactions.
We continue to target improvements in our operational efficiencies, with the goal of further driving down costs, increasing the use of multilateral drilling and assessing our Chester acreage. Additionally, our cost reduction efforts are moving forward rapidly. Current well costs are significantly lower than costs incurred in 2014 and we continue to expect to achieve our 2015 cost reduction goal in the second half of the year. These operational efficiencies are intended to ensure that the cash generating abilities of our assets continue to grow, and with the new funding transaction, provide the flexibility to expand activity on our higher-returning projects in our Mid-Continent development program, and continue long term value creation for shareholders."
The effectiveness of the revised revolving credit facility and issuance of the Senior Lien Notes, which are mutually conditioned on each other, are expected to occur on June 10, 2015, subject to satisfaction of customary closing conditions.