OKLAHOMA CITY, Nov. 5, 2018 /PRNewswire/ -- SandRidge
Energy (NYSE: SD) ("SandRidge" or the "Company") announced today it
has closed two transactions that will collectively generate
meaningful incremental asset value, margin improvements and
operational efficiencies for the Company.
On November 1, the Company sold
substantially all of its oil and gas properties, rights and related
assets in the Central Basin Platform ("CBP") region of the Permian
Basin, together with 13,125,000 Common Units of the SandRidge
Permian Trust (the "Trust"), to an unaffiliated party for net
proceeds of $14.5 million, subject to
certain post-closing adjustments. The subject oil and gas
properties largely consist of shallow, low net revenue interest
wells burdened by a substantial overriding royalty interest
conveyed to the Trust. Lease restrictions and Trust limitations on
these properties significantly constrain any additional development
beyond existing wellbores. The transaction simplifies the Company's
operations with the removal of a large population of low-rate and
shut-in wells, collectively averaging 1 Boepd per well and with
direct lifting costs of $30.50 per
bbl. The divestiture of almost 1,500 wells also eliminates
approximately 32% of the Company's total asset retirement
obligations.
On November 2, the Company
acquired certain oil and gas properties, rights and related assets
in the Mississippi Lime and NW STACK areas of Oklahoma and Kansas (the "Mid-Continent") for $25.1 million, subject to certain post-closing
adjustments. The acquired interests in these assets are additive to
existing SandRidge ownership positions. The Company operates
approximately 80% of the subject wells and holds an existing
working interest in most of the remaining wells operated by others.
In addition to well and lease rights, the Company is acquiring an
additional 13.2% interest in its produced water gathering and
disposal system. As of September, these oil and gas properties had
monthly net production of 3,775 Boepd and monthly net operating
income of $1.5 million. The
transaction is accretive to cash flow and net asset value per
share, and the Company estimates an associated payback period of
less than three years.
"Both transactions will have a positive impact on the Company's
operating efficiency," said Bill
Griffin, President and CEO. "The CBP properties accounted
for more than 12% of our total operating expenses, while
contributing only 4% of the production during the first half of
2018. The sales price of these properties represents an
attractive valuation, particularly considering their minimal growth
potential and royalty interest burden, which requires SandRidge to
cover 100% of operating costs but only receive 34% of revenues.
Exiting the Central Basin Platform simplifies the Company's
portfolio and operations, allowing SandRidge to increase our focus
on executing our long-term development and growth
strategy."
"The Mid-Continent transaction consolidates working interest in
acreage and properties currently held by the Company, requiring no
additional staffing to operate. These assets are well known by the
Company and add low risk incremental income. Pro forma for the two
transactions, the Company expects a net increase in current
production of 2,615 Boepd, reduced direct lease operating expenses
of $0.67 per Boe and incremental
proved PV-101 of approximately $38 million."
Mr. Griffin continued, "Considered together, these transactions
allow the Company to redeploy the declining residual cash flow of
legacy, non-core CBP assets, together with proceeds from the
previously disclosed Parkside building sale for $10.3 million, into an attractively priced,
complimentary acquisition. These are small but important next steps
that help demonstrate our ability to improve profitability and
create shareholder value."
Cautionary Statement Concerning the Present Value of Proved
Reserves
This communication contains information regarding the present value
of Company estimates of future cash flows as of November 1, 2018 from proved oil, natural gas and
natural gas liquids reserves, less future development and
production costs, discounted at 10% to reflect timing of future
cash flows using October 26, 2018
NYMEX futures prices and pricing assumptions that may differ from
that used in the calculation of standardized measure of oil and gas
reserves as required by generally accepted accounting principles.
The present value of the Company's proved reserves does not
represent an estimate of the fair market value of the Company's oil
and natural gas properties. The actual value that may be ultimately
recovered may differ substantially from these estimates. Factors
affecting ultimate recovery include geological and mechanical
factors affecting recovery rates, production costs, and
availability of services and equipment. Estimates of reserves and
resource potential may change significantly. These uncertainties
should be taken into account through appropriate risking in valuing
the Company's resource assets.
Cautionary Statement Concerning Forward Looking
Statements
This communication contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements express a belief, expectation or intention and are
generally accompanied by words that convey projected future events
or outcomes. Such statements are often identified by use of the
words "expects," "believes," "will," "would," "could," "forecasts,"
"projections," "estimates," "targets," "opportunities,"
"potential," and other similar terminology. All statements, other
than statements of historical facts, included in this press release
that address activities, events or developments that SandRidge
expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a
number of assumptions, risks and uncertainties, including, but not
limited to: the volatility of oil, gas and natural gas liquids
("NGL") prices; uncertainties inherent in estimating oil, gas and
NGL reserves and resource potential; the uncertainties, costs and
risks involved in exploration and development activities;
regulatory restrictions, compliance costs and other risks relating
to governmental regulation; risk related to third party control
over non-operated properties; midstream capacity constraints and
potential interruptions in production, and other factors, many of
which are beyond our control. SandRidge cautions that the foregoing
list of factors is not exclusive. Additional information concerning
these and other risk factors is contained in SandRidge's public
filings with the SEC, which are available at the SEC's website,
http://www.sec.gov. Each forward-looking statement speaks only as
of the date of the particular statement, and SandRidge undertakes
no obligation to publicly update any of these forward looking
statements to reflect events or circumstances that may arise after
the date hereof.
About SandRidge Energy, Inc.
SandRidge Energy, Inc. (NYSE: SD) is an oil and natural gas
exploration and production company headquartered in Oklahoma City, Oklahoma with its principal
focus on developing high-return, growth oriented projects in
Oklahoma and Colorado. The majority of the Company's
production is generated from the Mississippi Lime formation in
Oklahoma and Kansas. Current development activity is
generally focused on various reservoirs in the Anadarko Basin and multiple oil rich Niobrara
benches in the North Park Basin in Colorado
Investor Contact:
Johna Robinson
Investor Relations
SandRidge Energy, Inc.
123 Robert S. Kerr Avenue Oklahoma City,
OK 73102
+1 (405) 429-5515
1 The PV-10 of these proved reserves is based on a
November 1, 2018 effective date and
calculated using NYMEX forward closing prices for oil and natural
gas as of October 26, 2018.
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SOURCE SandRidge Energy, Inc.