Uncertainty around SandRidge’s well-water treatment and disposal business is dispelled
SandRidge Energy (ticker: SD) announced that the Internal Revenue Service decided to grant it a positive private letter ruling (PLR) in an 8-K filed by the company Monday. A decision on SandRidge’s well-water treatment and disposal business was snared for more than a year when the IRS decided to initiate a pause on PLRs following a spike in 2013.
The IRS has since released its proposed ruling on qualifying income for MLPs, but uncertainty remained if companies like SD, which filed before the pause, would receive positive PLRs following the end of the pause.
The company hopes to unlock additional value in the face of lower commodity prices. During the company’s first quarter conference call, SandRidge President and CEO James Bennett said that the company is also considering forming an MLP around oily assets in the future.
“[Forming an MLP is] one option that we’ve looked at,” he said. “Once you get a big base of low decline assets that are producing many, many thousands of barrels of oil a day, I think that opens up a lot of options for other forms of capital that are a lower cost of capital than us. MLPs are one.”
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.