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SandRidge Energy Inc. Third Quarter 2020 Results

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   |    Thursday,November 05,2020

SandRidge Energy, Inc. reported its Q3 2020 results.

Results and highlights during the quarter:

• Decreased net debt¹ by $44.7 million to $0.8 million compared to $45.5 million at the end of the prior quarter
• Generated Adjusted EBITDA of $15.4 million compared to $8.8 million in the prior quarter
• Produced 22.3 MBoepd compared to 23.6 MBoepd in the prior quarter
• Incurred a net loss of $48.7 million, or $1.36 per share, driven largely by lower commodity prices and a non-cash ceiling test write down. Adjusted net income was $5.4 million, or $0.15 per share
• Decreased G&A by $1.8 million to $2.5 million, or $1.22 per boe from $4.3 million, or $2.01 per boe in the prior quarter and decreased Adjusted G&A by $1.5 million to $2.3 million, or $1.11 per boe from $3.7 million, or 1.74 per boe in the prior quarter
• Decreased LOE by $0.6 million to $8.1 million, or $3.94 per boe from $8.7 million, or $4.04 per boe in the prior quarter
• Closed on the sale of the company headquarters for net proceeds of $35.4 million
• Closed on the acquisition of the overriding royalty interests held by SandRidge Mississippian Royalty Trust II for a net purchase price of $3.3 million
• Continued streak without a recordable Health, Safety and Environmental ("HS&E") incident for 25 months as of the end of the quarter

Financial Results

For the quarter, the Company reported a net loss of $48.7 million, or $1.36 per share, and net cash provided by operating activities of $27.4 million. After adjusting for certain items, the Company's adjusted net income amounted to $5.4 million, or $0.15 per share, operating cash flow totaled $12.7 million and adjusted EBITDA was $15.4 million for the quarter. The Company defines and reconciles adjusted net income, adjusted EBITDA and other non-GAAP financial measures to the most directly comparable GAAP measure in supporting tables at the conclusion of this press release.

Operational Results and Activity

Production totaled 2,048 MBoe (23.6 MBoepd, 22% oil, 32% NGLs and 46% natural gas) for the quarter.

Mid-Continent Assets in Oklahoma and Kansas

Production in the Mississippian totaled 1,719 MBoe (18.7 MBoepd, 12% oil) and 126 MBoe (1.4 MBoepd, 31% oil) in the Northwest STACK during the quarter.

North Park Basin Assets in Colorado

Net production for North Park Basin totaled 203 MBoe (2.2 MBoepd, 100% oil) during the quarter.

Building Sale

On August 31, 2020, the Company closed on the previously announced sale of its corporate headquarters building located in Oklahoma City, OK for net proceeds of approximately $35.4 million.

ORRI Acquisition

On September 10, 2020, the Company acquired all of the overriding royalty interests of SandRidge Mississippian Royalty Trust II for a gross purchase price of $5.25 million (net purchase price of $3.28 million, given the Company's prior 37.6% ownership of the Trust).

2020 Capital Expenditures and Operational Guidance

The Company reaffirms its 2020 capital expenditures and operational guidance previously published on May 18, 2020.

Liquidity and Capital Structure

As of September 30, 2020, the Company's total liquidity was $69.9 million, based on $11.2 million of cash, excluding restricted cash and $58.7 million available under its credit facility. The Company currently has $12.0 million drawn under its $75.0 million facility and $4.3 million in outstanding letters of credit.

Given the net proceeds from the third quarter sale of our corporate headquarters for $35.4 million as well as several initiatives from prior quarters expected to optimize free cash flow, including personnel and non-personnel cost reductions and entering into commodity derivative contracts for natural gas, we were able to alleviate prior conditions that gave rise to substantial doubt about our ability to continue as a going concern.