S&P cuts SandRidge Energy notes to B

Standard & Poor's said it affirmed the B+ corporate credit rating and CCC+ preferred stock rating on SandRidge Energy Inc. and lowered its senior debt rating to B from B+. The recovery rating was revised to 5, indicating expectation of 10% to 30% recovery, from 4.

The outlook is negative. The rating was removed from CreditWatch with negative implications where it was placed on Nov. 10.

"The ratings on SandRidge Energy reflect its highly leveraged financial profile and geographic concentration in Texas and Oklahoma, as well as Standard & Poor's expectation that near-term natural gas prices will remain weak," S&P analyst Patrick Jeffrey said in a statement.

Ratings also reflect SandRidge's strategic shift to increase oil production and natural gas liquids from natural gas in response to weak near-term natural gas prices, the agency said.

If the company is not able to achieve planned asset sales with proceeds at the high end of its guidance, adjusted total debt-to-EBITDAX ratio could be about 5x at the end of 2011, which is well above the 4.5x threshold for the ratings, S&P noted.

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