SandRidge Energy, Inc., First Quarter 2023 Results

Profitability & Realized Pricing

For the three months ended March 31, 2023, the Company reported net income of $23.8 million, or $0.64 per basic share, and net cash provided by operating activities of $39.8 million. After adjusting for certain items, the Company's adjusted net income⁽¹⁾ amounted to $25.7 million, or $0.70 per basic share, adjusted operating cash flow⁽¹⁾ totaled $33.7 million and adjusted EBITDA⁽¹⁾ was $31.2 million for the quarter. The Company defines and reconciles adjusted net income, adjusted operating cash flow, adjusted EBITDA, and other non-GAAP financial measures to the most directly comparable Generally Accepted Accounting Principles in the United States ("GAAP") measure in supporting tables at the conclusion of this press release.

The Company generated approximately $30.4 million of free cash flow⁽¹⁾ in the first quarter, which represents a conversion rate of approximately 98% relative to adjusted EBITDA.

First quarter realized oil, natural gas, and natural gas liquids prices, before the impact of derivatives,⁽²⁾ were $74.26 per Bbl, $2.73 per Mcf and $24.62 per Bbl, respectively, compared to $79.10 per Bbl, $4.40 per Mcf and $25.73 per Bbl in the prior quarter. The table below compares the Company's first quarter oil, natural gas and natural gas liquids price realizations, before the impact of derivatives⁽²⁾, to the daily average spot prices for NYMEX Henry Hub Natural Gas and West Texas Intermediate Oil ("WTI"):

Operating Costs

During the first quarter of 2023, lease operating expense ("LOE") was $11.7 million or $7.79 per Boe primarily driven by increased activity over the period in response to winter weather events, increased costs driven by inflation, and more producing wells driven by the Company's well reactivation program.

For the three months ended March 31, 2023, general and administrative expense ("G&A") was $2.9 million, or $1.94 per Boe. Adjusted G&A⁽¹⁾ was $2.5 million, or $1.68 per Boe.

Liquidity and Capital Structure

As of March 31, 2023, the Company had $287.6 million of cash and cash equivalents, including restricted cash, diversified across multiple financial institutions. The Company has no outstanding term or revolving debt obligations.

Operational Results & Update

Production

Production totaled 1,500 MBoe (16.7 MBoed, 17% oil, 28% NGLs and 55% natural gas) for the three months ended March 31, 2023 compared to 1,606 MBoe (17.8 MBoed, 13% oil, 33% NGLs, and 54% natural gas) for the three months ended March 31, 2022. SandRidge's capital development program has helped increase oil content as a percentage of total production.

Development Program

SandRidge operated one drilling rig in the first quarter and successfully drilled and completed two wells targeting the Meramec formation in the core of the NW Stack play as part of its previously announced capital development program. The Company plans to drill and complete two additional operated wells, which will conclude its program for the year. SandRidge will continue to monitor opportunities for future development, with its primary focus being to generate high rates of return. The higher oil content of its new NW stack wells versus the Company's base production was the primary driver of SandRidge's oil production increasing by approximately 22% in the first quarter of 2023 versus the first quarter of 2022. This increases the Company's oil as a percentage of total production and enhances its commodity realizations.

Well Reactivation & Rod Pump Conversion Program

Since the beginning of 2021, the Company has returned 182 wells to production. During the first quarter, SandRidge also completed four artificial lift conversions, helping to lower forward-looking operating costs for this well set. These projects have helped lower SandRidge's expected annual PDP decline to an average of ~8% over the next ten years. The Company continues to ensure that all projects meet high rate of return thresholds and remains capital disciplined as the commodity price landscape has changed in recent months. As a result, reactivation activity has decreased in 2023 but could increase again as commodity prices recover.

Outlook

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

Environmental, Social, and Governance ("ESG")

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