OKLAHOMA CITY, May 7, 2018 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE: SD) today announced financial and operational results for the quarter ended March 31, 2018, which include the following highlights:
- Implemented Management Changes and Announced Process to Review Strategic Alternatives
- Reducing General and Administrative Cash Expense Rate by One-Third
- Reallocated Capital to Drill Four Mississippian Wells in the Third Quarter
- Reaffirming 2018 Guidance
For the first quarter, the Company reported a net loss of $41 million, or $1.18 per share, and net cash provided by operating activities of $30 million. When adjusting these reported amounts for items that are typically excluded by the investment community on the basis that such items affect the comparability of results, the Company's "adjusted net income" amounted to $5 million, or $0.15 per share, and "operating cash flow" totaled $21 million. Earnings before interest, income taxes, depreciation, depletion, and amortization, adjusted for certain other items, otherwise referred to as "adjusted EBITDA," for the first quarter was $40 million.(1)
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1) The Company has defined and reconciled certain non-GAAP financial measures including adjusted net income, operating cash flow, EBITDA, adjusted EBITDA and adjusted G&A expense, to the most directly comparable GAAP financial measures in supporting tables at the conclusion of this press release under the "Non-GAAP Financial Measures" beginning on page 12. |
Included in the Company's first quarter results is a $32 million charge related to employee termination benefits. Of this amount, $19 million was paid in cash and $13 million was paid in the form of stock-based compensation. As a result of these and other cost-cutting measures, our 2018 first quarter general and administrative expenditures decreased $6 million year-over-year, or 28%.
Liquidity & Capital Structure
As of May 1, 2018, the Company's liquidity totaled $436 million, which includes $18 million of cash and $418 million of borrowing capacity under the credit facility, net of outstanding letters of credit.
The Company currently has no funds drawn under its credit facility. During the quarter, the Company repaid its $36 million building note, resulting in no outstanding long-term debt at March 31, 2018. The Company's $425 million credit facility borrowing base was unanimously reaffirmed by its lenders at the regularly scheduled spring borrowing base redetermination.
Management Comments
Bill Griffin, President and CEO commented, "The first quarter performance for SandRidge demonstrates the Company's consistent ability to execute and adapt to change. We successfully initiated a shift in strategy and leadership, while continuing to remain focused on delivering solid operating and financial results."
Mr. Griffin continued, "We significantly reduced overhead and improved operating margins, which better positions SandRidge to achieve profitable growth and value recognition. Our capital program continues to provide positive results. During the quarter, we completed four new NW STACK Meramec wells with an average 30-Day IP of 675 Boepd, exceeding pre-drill estimates. In the North Park Basin, our capital expenditures were primarily associated with pad drilling within our core area to further define optimal well spacing. As a result, we have seven new North Park wells currently scheduled for completion, with expected significant associated oil production coming online this summer. Most importantly, our program, while delivering strong returns, continues to increase the level of confidence in our undeveloped resource value and potential.
In conjunction with a comprehensive reassessment of the SandRidge drilling portfolio in the current commodity price environment, we have elected to reallocate a portion of our development capital to the Mississippi Lime. We now plan to drill four new wells during the third quarter, which are expected to provide competitive returns and further demonstrate the current undeveloped value in this area after an extended period of drilling inactivity. This change will not impact our 2018 total company guidance."
Mr. Griffin further added, "Our strong balance sheet remains a key consideration as we advance the formal process announced in March to assess strategic options to unlock and generate meaningful incremental value for all shareholders. We are finalizing a comprehensive reassessment of the Company's entire drilling inventory, along with the creation of an associated reserve development plan, which will lend support in the evaluation of any strategic alternatives. We and our advisors are committed to a thorough and impartial review of all proposals and will proceed expeditiously to ascertain the best go-forward strategy for SandRidge."
Operational Results and Activity
During the quarter, production totaled 3.2 MMBoe (29% oil, 22% NGLs and 49% natural gas). The Company averaged one rig in the NW STACK targeting the Meramec and one rig targeting multiple benches of the Niobrara in the North Park Basin. Capital expenditures totaled $37 million.
Mid-Continent Assets in Oklahoma and Kansas
In the first quarter, production in the Mid-Continent totaled 2.9 MMBoe (32 MBoepd, 22% oil). The Company averaged one rig in the NW STACK targeting the Meramec and drilled six SRLs. Of the six wells drilled, five were under the previously announced Drilling Participation Agreement. The Company brought four SRLs online with a combined 30-Day IP averaging 675 Boepd (76% oil). At current commodity prices, these wells have a projected average rate of return in excess of 30%. In addition, four more wells were brought online near or subsequent to quarter end, all with strong preliminary results (less than 30 days). Estimated drilling and completion costs for SRL and XRL wells are currently $4.4 million and $6.5 million, respectively.
Niobrara Asset in North Park Basin, Jackson County, Colorado
Oil production in the North Park Basin totaled 213 MBo (2.4 MBopd) for the first quarter. The Company averaged one rig targeting multiple benches in the Niobrara and drilled four XRLs and one SRL. The four XRLs conclude the drilling of an eight well wine rack spacing test. Five new wells and two remaining DUCs are currently beginning completion operations and are expected to come online late in the second quarter or early in the third quarter. Additionally, one XRL and one SRL were brought online during the first quarter.
During the quarter, the Company signed a definitive agreement for a small scale modular gas to liquids ("GTL") processing facility to be placed at the Big Horn tank battery. The facility will be constructed and operated by a third party at no cost to SandRidge. Both companies will share proceeds from associated liquids recovery by this gas processing. The initial facility is expected to process approximately 500 Mcf per day. The facility provides a scalable gas processing option while the Company advances its long-term development of pipeline takeaway. Upon successful installation of the facility in 2019, the Company will evaluate the potential to add additional GTL facilities.
Other Operational Activities
During the first quarter, Permian Central Basin Platform properties produced 114 MBoe (1.3 MBoepd, 81% oil, 12% NGLs, 7% natural gas).
Conference Call Information
The Company will host a conference call to discuss these results on Tuesday, May 8, 2018 at 8:00 am CT. The telephone number to access the conference call from within the U.S. is (833) 245-9650 and from outside the U.S. is (647) 689-4222. The passcode for the call is 2689729. An audio replay of the call will be available from May 8, 2018 until 11:59 pm CT on June 8, 2018. The number to access the conference call replay from within the U.S. is (800) 585-8367 and from outside the U.S. is (416) 621-4642. The passcode for the replay is 2689729.
A live audio webcast of the conference call will also be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Presentation & Events. The webcast will be archived for replay on the Company's website for 30 days.
2018 Operational and Capital Expenditure Guidance
Presented below is the Company's capital expenditure and operational guidance for 2018.
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Guidance |
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Projection as of |
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May 7, 2018 |
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Production |
||||
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Oil (MMBbls) |
3.4 - 3.6 |
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Natural Gas Liquids (MMBbls) |
2.6 - 2.8 |
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Total Liquids (MMBbls) |
6.0 - 6.4 |
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Natural Gas (Bcf) |
31.5 - 33.0 |
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Total (MMBoe) |
11.3 - 11.9 |
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Price Differential |
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Oil (per Bbl) |
$2.80 |
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Natural Gas Liquids (realized % of NYMEX WTI) |
33% |
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Natural Gas (per MMBtu) |
$1.20 |
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Expenses |
||||
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LOE |
$95 - $105 million |
|||
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Adjusted G&A Expense1 |
$41 - $44 million |
|||
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% of Revenue |
||||
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Production Taxes |
4.80% |
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Capital Expenditures ($ in millions) |
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Drilling and Completion |
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Mid-Continent |
$17 - $19 |
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North Park Basin |
65 - 73 |
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Other2 |
34 |
|||
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Total Drilling and Completion |
$116 - $126 |
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Other E&P |
||||
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Land, G&G, and Seismic |
$15 |
|||
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Infrastructure3 |
15 |
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Workover |
25 |
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Capitalized G&A and Interest |
8 |
|||
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Total Other Exploration and Production |
$63 |
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General Corporate |
1 |
|||
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Total Capital Expenditures |
$180 - $190 |
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(excluding acquisitions and plugging and abandonment) |
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1) |
Adjusted G&A expense is a non-GAAP financial measure. The Company has defined this measure at the conclusion of this press release under "Non-GAAP Financial Measures" beginning on page 12. 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. |
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2) |
Primarily 2017 Carryover |
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3) |
Includes Production Facilities, Pipeline ROW and Electrical |
Operational and Financial Statistics
Information regarding the Company's production, pricing, costs and earnings is presented below:
|
Three Months Ended March 31, | |||||||
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2018 |
2017 | ||||||
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Production - Total |
|||||||
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Oil (MBbl) |
926 |
1,134 |
|||||
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NGL (MBbl) |
700 |
887 |
|||||
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Natural Gas (MMcf) |
9,487 |
11,766 |
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Oil equivalent (MBoe) |
3,207 |
3,982 |
|||||
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Daily production (MBoed) |
35.6 |
44.2 |
|||||
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Average price per unit |
|||||||
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Realized oil price per barrel - as reported |
$ |
57.60 |
$ |
49.19 |
|||
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Realized impact of derivatives per barrel |
(8.40) |
0.27 |
|||||
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Net realized price per barrel |
$ |
49.20 |
$ |
49.46 |
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Realized NGL price per barrel - as reported |
$ |
23.41 |
$ |
16.27 |
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Realized impact of derivatives per barrel |
— |
— |
|||||
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Net realized price per barrel |
$ |
23.41 |
$ |
16.27 |
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Realized natural gas price per Mcf - as reported |
$ |
1.82 |
$ |
2.37 |
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Realized impact of derivatives per Mcf |
0.17 |
(0.08) |
|||||
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Net realized price per Mcf |
$ |
1.99 |
$ |
2.29 |
|||
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Realized price per Boe - as reported |
$ |
27.12 |
$ |
24.65 |
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Net realized price per Boe - including impact of derivatives |
$ |
25.21 |
$ |
24.49 |
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Average cost per Boe |
|||||||
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Lease operating |
$ |
7.71 |
$ |
6.28 |
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Production taxes |
$ |
1.47 |
$ |
0.80 |
|||
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Depletion (1) |
$ |
8.73 |
$ |
6.78 |
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Earnings per share |
|||||||
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(Loss) earnings per share applicable to common stockholders |
|||||||
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Basic |
$ |
(1.18) |
$ |
1.90 |
|||
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Diluted |
$ |
(1.18) |
$ |
1.90 |
|||
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Adjusted net income per share available to common stockholders |
|||||||
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Basic |
$ |
0.15 |
$ |
0.78 |
|||
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Diluted |
$ |
0.15 |
$ |
0.78 |
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Weighted average number of shares outstanding (in thousands) |
|||||||
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Basic |
34,575 |
26,801 |
|||||
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Diluted (2) |
34,637 |
26,801 |
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(1) |
Includes accretion of asset retirement obligation. |
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(2) |
Includes shares considered antidilutive for calculating loss per share in accordance with GAAP. |
Capital Expenditures
The table below presents actual results of the Company's capital expenditures for the three months ended March 31, 2018 at the same level of detail as its full year capital expenditure guidance.
|
Three Months Ended | |||
|
March 31, 2018 | |||
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(In thousands) | |||
|
Drilling and Completion |
|||
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Mid-Continent |
$ |
1,917 |
|
|
North Park Basin |
8,234 |
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Other1 |
15,565 |
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Total Drilling and Completion |
25,716 |
||
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Other E&P |
|||
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Land, G&G, and Seismic |
1,691 |
||
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Infrastructure2 |
1,975 |
||
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Workovers |
6,368 |
||
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Capitalized G&A and Interest |
1,516 |
||
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Total Other Exploration and Production |
11,549 |
||
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General Corporate |
— |
||
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Total Capital Expenditures |
$ |
37,265 |
|
|
(excluding acquisitions and plugging and abandonment) |
|||
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1) Primarily 2017 Carryover |
|||
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2) Infrastructure - Production Facilities, Pipeline ROW and Electrical |
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Derivative Contracts
In light of the high correlation between NGL and NYMEX WTI prices, the Company manages a portion of its NGL price exposure using NYMEX WTI contracts at a three-to-one (3:1) NGL to crude ratio. The table below sets forth the Company's consolidated oil and natural gas price swaps for 2018 and 2019 as of May 1, 2018:
|
Quarter Ending |
||||||||||||||||
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3/31/2018 |
6/30/2018 |
9/30/2018 |
12/31/2018 |
FY 2018 | ||||||||||||
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WTI Swaps: |
||||||||||||||||
|
Total Volume (MMBbls) |
1.05 |
1.00 |
0.92 |
0.83 |
3.80 | |||||||||||
|
Daily Volume (MBblspd) |
11.7 |
11.0 |
10.0 |
9.0 |
10.4 | |||||||||||
|
Swap Price ($/bbl) |
$55.46 |
$55.50 |
$56.04 |
$56.12 |
$55.75 | |||||||||||
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Natural Gas Swaps: |
||||||||||||||||
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Total Volume (Bcf) |
6.30 |
3.64 |
3.68 |
3.68 |
17.30 | |||||||||||
|
Daily Volume (MMBtupd) |
70.0 |
40.0 |
40.0 |
40.0 |
47.4 | |||||||||||
|
Swap Price ($/MMBtu) |
$3.24 |
$3.11 |
$3.11 |
$3.11 |
$3.16 | |||||||||||
|
3/31/2019 |
6/30/2019 |
9/30/2019 |
12/31/2019 |
FY 2019 | ||||||||||||
|
WTI Swaps: |
||||||||||||||||
|
Total Volume (MMBbls) |
0.45 |
0.46 |
0.46 |
0.46 |
1.83 | |||||||||||
|
Daily Volume (MBblspd) |
5.0 |
5.0 |
5.0 |
5.0 |
5.0 | |||||||||||
|
Swap Price ($/bbl) |
$54.29 |
$54.29 |
$54.29 |
$54.29 |
$54.29 | |||||||||||
Capitalization
The Company's capital structure as of March 31, 2018 and December 31, 2017 is presented below:
|
March 31, |
December 31, | ||||||
|
(In thousands) | |||||||
|
Cash, cash equivalents and restricted cash |
$ |
29,178 |
$ |
101,308 |
|||
|
Credit facility |
$ |
— |
$ |
— |
|||
|
Building note |
— |
37,502 |
|||||
|
Total debt |
— |
37,502 |
|||||
|
Stockholders' equity |
|||||||
|
Common stock |
36 |
36 |
|||||
|
Warrants |
88,500 |
88,500 |
|||||
|
Additional paid-in capital |
1,052,718 |
1,038,324 |
|||||
|
Accumulated deficit |
(327,814) |
(286,920) |
|||||
|
Total SandRidge Energy, Inc. stockholders' equity |
813,440 |
839,940 |
|||||
|
Total capitalization |
$ |
813,440 |
$ |
877,442 |
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