SandRidge Energy plans decreased activity through year-end, ends Q1 with ‘ample’ liquidity

By Lisa Kerner

Charlotte, N.C., May 7 – SandRidge Energy Inc. is decreasing activity in the remainder of 2015, as planned, to end the year with about seven rigs, versus 34 rigs at the end 2014, said chief executive officer and president James Bennett.

“While we had capital expenditures of $322 million in the first quarter, we are reducing spending sharply in the second half of this year in line with our guidance of $700 million,” Bennett said.

“This fiscal discipline coupled with operational efficiency gains provide options to improve our balance sheet as we actively evaluate alternatives to bring our cash generation and debt levels in line.”

The Oklahoma City-based oil and natural gas company held its first-quarter earnings conference call on Thursday.

SandRidge ended the quarter on March 31 with “ample” liquidity of $725 million, according to the earnings presentation.

Chief financial officer Eddie LeBlanc said the company had $12 million of cash on hand and $713 million of availability under its $900 million borrowing base.

“This liquidity position going forward is enhanced by our hedge position and allows us to select the right liquidity management option for the company at favorable pricing,” LeBlanc said on the call.

Debt of $3.4 billion at quarter-end included a $175 million senior credit facility, $446 million of 8¾% senior notes due 2020, $1.2 billion of 7½% senior notes due 2021, $750 million of 8 1/8% senior notes due 2022 and $822 million of 7½% senior notes due 2023.

SandRidge’s first-quarter debt, net of cash balances, was up by about $345 million as a result of funding its drilling program.

“We do have options to reduce debt,” Bennett said on the call, noting that SandRidge is “looking at many alternatives” and “nothing’s off the table.”

“It’s a question of price while balancing liquidity and leverage,” he said.

Financial highlights

The company had adjusted EBITDA, net of noncontrolling interest, of $182 million for the quarter. This compares to $169 million in first-quarter 2014, pro forma for divestitures, according to the earnings news release.

First-quarter adjusted operating cash flow was up at $146 million, compared to $127 million for the first-quarter 2014.

SandRidge had adjusted net income for the period of $2.3 million, or $0.00 per diluted share, compared to adjusted net income of $29.5 million, or $0.05 per diluted share, in the prior-year period.

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