SandRidge Energy's debt up by $500 million in third quarter, company boasts 'strong' liquidity

By Lisa Kerner

Charlotte, N.C., Nov. 9 - SandRidge Energy Inc. saw its debt, net of cash balances, increase by $500 million in the third quarter of 2012, primarily as a result of an August senior notes offering and funding of the company's drilling program.

Proceeds from the August $1.1 billion senior notes offering were used to refinance $350 million of 2014 senior note maturities, with the remaining net proceeds to be used to fund the company's 2013 drilling program.

Liquidity at quarter-end was "strong" at $1.3 billion and included $535 billion of cash, said chief financial officer James Bennett during the company's earnings call Friday.

The company's $1.75 billion 2013 capital plan is fully funded, said Bennett.

SandRidge reported total debt of $4.3 billion and net debt of $3.6 billion at quarter-end.

The company's leverage ratio was 3.2 times.

SandRidge was in compliance with all applicable covenants contained in its debt agreements during the nine months ended Sept. 30 and through and as of the date of its Nov. 8 earnings release.

On Nov. 5, the company had no amount drawn under its $775 million senior credit facility and about $535 million of cash.

Possible asset sale

Chairman and chief executive officer Tom Ward said SandRidge is exploring the sale of its assets in the Permian Basin, other than those associated with SandRidge Permian Trust.

Proceeds would fund development of the company's Mississippian Play, pay down debt, narrow its cap ex to cash flow gap and fully fund SandRidge's capital expenditures through 2014, said Ward on the call.

Financial highlights

For the third quarter of 2012, SandRidge reported adjusted EBITDA of $297 million, up from $171 million in the third quarter of 2011.

Operating cash flow for the period was also up at $281 million, compared to $147 million in the prior-year period for the Oklahoma City-based oil and natural gas company.

SandRidge reported a net loss applicable to common stockholders of $184 million, or $0.39 per diluted share, for the third quarter of 2012, compared with a net loss applicable to common stockholders of $561 million, or $1.16 per diluted share, in the third quarter of 2011.

Net loss applicable to common stockholders of $184 million, or $0.39 per diluted share, for third-quarter 2012 compared to net income available to common stockholders of $561 million, or $1.16 per diluted share, in third-quarter 2011.

Adjusted net income of $29.6 million, or $0.05 per diluted share, for third-quarter 2012 compared to adjusted net income of $5.1 million, or $0.01 per diluted share, in the prior-year period.

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