SandRidge Energy, Inc. Updates Shareholders on Financial Results for Third Quarter 2014 and First Nine Months of 2014

in Energy News   by—

SandRidge Energy, Inc. (the “Company”) (SD) today announced financial results for the quarter that ended September 30, 2014. The Company also filed restated results for quarterly periods in 2013 and 2014.

Eddie LeBlanc, SandRidge’s Chief Financial Officer and Executive Vice-President, commented, “Today’s release of financial results for the third quarter of 2014 complements our November 2014 operating results press release. As the result of discussions with the SEC, we are now accruing a portion of the annual CO2 under delivery penalty each quarter which we previously recorded at the end of each year. Restated financial statements are included in amended historic quarterly and annual reports we are filing today. Importantly, annual results and cash flows remain unchanged.”

Key Financial Results

Third Quarter

  • Adjusted EBITDA, pro forma for divestitures and net of Noncontrolling Interest, was $225 million in the third quarter of 2014 compared to $160 million in the third quarter of 2013, 41% year-over-year growth.
  • Adjusted operating cash flow of $203 million for third quarter 2014 compared to $227 million in third quarter 2013.
  • Adjusted net income of $43.0 million, or $0.07 per diluted share, for third quarter 2014 compared to adjusted net income of $31.7 million, or $0.06 per diluted share, in third quarter 2013.

Nine Months

  • Adjusted EBITDA, pro forma for divestitures and net of Noncontrolling Interest, was $596 million in the first nine months of 2014 compared to $418 million in the first nine months of 2013, 42% year-over-year growth.
  • Adjusted operating cash flow of $509 million for first nine months of 2014 compared to $569 million in first nine months of 2013. Included in the first nine months of 2014 results is $70 million of cash paid to unwind hedges related to the Gulf of Mexico divestiture.
  • Adjusted net income of $109.2 million, or $0.19 per diluted share, for first nine months of 2014 compared to adjusted net income of $64.9 million, or $0.11 per diluted share, in first nine months of 2013.

Adjusted net income available to common stockholders, pro forma adjusted EBITDA and adjusted operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under “Non-GAAP Financial Measures” beginning on page 7.

As previously discussed in a Form 8-K filed on November 4, 2014, the Company has been in discussions with the Securities and Exchange Commission regarding certain accounting matters.  As a result of these discussions, the Company restated its 2013 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014. For the three month periods ended, March 31, 2013 and 2014 and June 30, 2013 and 2014, an estimated CO2 under delivery shortfall penalty was recorded in each quarter. The effect of the restatement for 2013 is to transfer a portion of the annual CO2 under delivery shortfall penalty accrual that was previously recorded at year-end to the quarter-end periods within such year. The change in accounting treatment impacts the first, second and third quarters of 2013 by approximately $8 million of net income per quarter, while rendering no change to the 2013 annual net income. The first and second quarters of 2014 are also impacted by approximately $8 million of net income per quarter.

Additionally, the Company also revised the recording of the Century Plant construction contract to account for it under the full cost method of accounting rather than the completed contract method of accounting for the year ended 2012. This resulted in eliminating an equal amount of income and expense from the 2012 Condensed Consolidated Statements of Operations and had no impact on total assets, total liabilities, net income or retained earnings.

These restatements along with our Form 10-Q for the three month period ended September 30, 2014, which also included restated financial information related to the delivery shortfall penalty accrued for the three month period ended September 30, 2013, were filed on January 8, 2015.

James Bennett, SandRidge’s Chief Executive Officer and President, stated, “As highlighted in our November third quarter operations update, we’re expanding our low cost multilateral program and successfully extending our Mid-Continent resource base with Chester and Woodford production. Since the operating update, oil prices have fallen sharply; however, SandRidge is defensively positioned for 2015. We have an enviable hedge position on the vast majority of our liquids production, have no bond maturities until 2020 and at quarter end $1.4 billion of liquidity. Importantly, our Mid-Continent drilling program continues to generate commercial returns, even at current commodity prices. Given the market backdrop, we are high grading our development plans and are already reducing our rig count and capex levels. We anticipate announcing 2015 capital plans and full year guidance in February. Meanwhile, our teams are focused on continued well cost reductions, now further supported by likely lower service costs ahead.”

Operational and Financial Statistics

Information regarding the Company’s production, pricing, costs and earnings is presented below:

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Production

Oil (MBbl)

2,644

3,372

7,927

10,902

NGL (MBbl)

1,109

577

2,500

1,608

Natural gas (MMcf)

21,501

25,788

62,335

78,342

Oil equivalent (MBoe)

7,337

8,247

20,816

25,567

Daily production (MBoed)

79.7

89.6

76.2

93.7

Production – Pro Forma (1)

Oil (MBbl)

2,644

2,278

7,254

6,629

NGL (MBbl)

1,109

453

2,447

1,009

Natural gas (MMcf)

21,501

18,525

58,760

52,921

Oil equivalent (MBoe)

7,337

5,819

19,495

16,458

Daily production (MBoed)

79.7

63.3

71.4

60.3

Average price per unit

Realized oil price per barrel – as reported

$                94.60

$              105.87

$                97.12

$                98.39

Realized impact of derivatives per barrel

0.26

(6.21)

(1.27)

1.10

Net realized price per barrel

$                94.86

$                99.66

$                95.85

$                99.49

Realized NGL price per barrel – as reported

$                35.84

$                36.35

$                37.84

$                34.49

Realized impact of derivatives per barrel

–

–

–

–

Net realized price per barrel

$                35.84

$                36.35

$                37.84

$                34.49

Realized natural gas price per Mcf – as reported

$                 3.24

$                 3.15

$                 3.86

$                 3.36

Realized impact of derivatives per Mcf

0.13

0.30

(0.22)

0.08

Net realized price per Mcf

$                 3.37

$                 3.45

$                 3.64

$                 3.44

Realized price per Boe – as reported

$                49.01

$                55.68

$                53.08

$                54.43

Net realized price per Boe – including impact of derivatives

$                49.48

$                54.08

$                51.95

$                55.11

Average cost per Boe

Lease operating (2) 

$                11.27

$                15.11

$                12.32

$                15.25

Production taxes

1.14

1.07

1.15

0.97

General and administrative

General and administrative, excluding stock-based compensation

$                 2.77

$                 4.01

$                 3.80

$                 8.35

Stock-based compensation

0.58

0.84

0.76

3.10

Total general and administrative

$                 3.35

$                 4.85

$                 4.56

$                11.45

General and administrative – adjusted

General and administrative, excluding stock-based compensation (3)

$                 2.76

$                 3.68

$                 3.44

$                 4.35

Stock-based compensation (4)

0.55

0.64

0.66

0.96

Total general and administrative – adjusted

$                 3.31

$                 4.32

$                 4.10

$                 5.31

Depletion (5)

$                15.49

$                17.72

$                15.99

$                18.07

Lease operating cost per Boe

Mid-Continent

$                 7.87

$                 7.02

$                 7.76

$                 7.77

Earnings per share

Earnings (loss) per share applicable to common stockholders

Basic

$                 0.30

$                (0.20)

$                (0.11)

$                (1.33)

Diluted

0.27

(0.20)

(0.11)

(1.33)

Adjusted net income per share available to common stockholders

Basic

$                 0.07

$                 0.04

$                 0.14

$                 0.05

Diluted

0.07

0.06

0.19

0.11

Weighted average number of common shares outstanding (in thousands)

Basic

485,458

483,582

485,194

480,209

Diluted (6)

575,912

573,716

578,125

571,354

(1)

Excludes production attributable to Permian properties (sold first quarter 2013) and Gulf of Mexico properties (sold first quarter 2014).

(2)

Expense for three and nine-month periods ended September 30, 2013 has been restated for quarterly accrual of CO2delivery shortfall penalty.

(3)

Excludes transaction costs, legal settlements, severance and consent solicitation costs totaling$0.1 million and $7.5 million for the three and nine-month periods ended September 30, 2014, respectively.  Excludes  transaction costs, legal settlements, severance, annual incentive plan adoption effect and consent solicitation costs totaling $2.7 million and $102.2 million for the three and nine-month periods ended September 30, 2013, respectively.

(4)

Excludes $0.2 million and $2.2 million for the three and nine-month periods ended September 30, 2014, respectively, and $1.7 million and $54.7 million for the three and nine-month periods ended September 30, 2013, respectively, for the acceleration of stock awards.

(5)

Includes accretion of asset retirement obligation.

(6)

Includes shares considered antidilutive for calculating earnings per share in accordance with GAAP for certain periods presented.

Capital Expenditures

The table below summarizes the Company’s capital expenditures for the three and nine-month periods ended September 30, 2014 and 2013:

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

(in thousands)

Drilling and production

Mid-Continent

$           336,171

$           188,374

$           743,059

$           647,019

Permian Basin

49,314

44,309

155,788

155,903

Gulf of Mexico/Gulf Coast

–

47,708

22,975

161,700

385,485

280,391

921,822

964,622

Leasehold and seismic

Mid-Continent

47,260

13,526

127,296

52,611

Permian Basin

85

–

624

–

Gulf of Mexico/Gulf Coast 

–

723

159

2,072

WTO/Other

2,255

1,370

7,366

3,832

49,600

15,619

135,445

58,515

Inventory

674

(3,351)

(728)

(14,384)

Total exploration and development

435,759

292,659

1,056,539

1,008,753

Drilling and oil field services

3,603

3,142

10,877

4,657

Midstream

14,045

16,551

25,810

46,883

Other – general 

14,422

10,230

27,311

38,159

Total capital expenditures, excluding acquisitions

467,829

322,582

1,120,537

1,098,452

Acquisitions

367

6,925

16,920

15,527

Total capital expenditures

$           468,196

$           329,507

$        1,137,457

$        1,113,979

Derivative Contracts

The table below sets forth the Company’s consolidated oil and natural gas price swaps and collars for the years 2015 and 2016 as of January 6, 2015 and includes contracts that have been novated to or the benefits of which have been conveyed to SandRidge sponsored royalty trusts.

Year Ending

2015

2016

Oil (MMBbls)

Swap Volume

5.59

1.46

Swap

$92.44

$88.36

Three-way Collar Volume

4.58

2.56

Call Price 

$103.48

$100.85

Put Price 

$90.28

$90.00

Short Put Price 

$76.56

$83.13

Natural Gas (Bcf)

Swap Volume

19.90

–

Swap

$4.51

–

Collar Volume

1.01

–

Collar:  High

$8.55

–

Collar:  Low

$4.00

–

Natural Gas Basis (Bcf)

Swap Volume

21.9

–

Swap

($0.27)

–

Selected Balance Sheet Data

The Company’s capital structure at September 30, 2014 and December 31, 2013 is presented below (in thousands):

September 30, 

December 31,

2014

2013

(in thousands)

Cash and cash equivalents

$         590,246

$       814,663

Long-term debt (net of current maturities)

Senior Notes

8.75% Senior Notes due 2020, net

445,232

444,736

7.5% Senior Notes due 2021

1,178,598

1,178,922

8.125% Senior Notes due 2022

750,000

750,000

7.5% Senior Notes due 2023, net

821,471

821,249

  Total debt 

3,195,301

3,194,907

Stockholders’ equity

Preferred stock

8

8

Common stock

483

483

Additional paid-in capital

5,289,124

5,294,551

Treasury stock, at cost

(6,823)

(8,770)

Accumulated deficit

(3,511,498)

(3,460,462)

Total SandRidge Energy, Inc. stockholders’ equity

1,771,294

1,825,810

Noncontrolling interest

1,266,482

1,349,817

Total capitalization

$      6,233,077

$    6,370,534

During the third quarter of 2014, the Company’s debt, net of cash balances, increased by approximately $330 million as a result of funding the Company’s drilling program. The Company had no amount drawn under its senior credit facility.

Non-GAAP Financial Measures

Adjusted operating cash flow, adjusted EBITDA, pro forma adjusted EBITDA, adjusted net income and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.

The Company defines adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities and adjusted for cash (paid) received on financing derivatives. It defines EBITDA as net income (loss) before income tax (benefit) expense, interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding asset impairment, interest income, (gain) loss on derivative contracts net of cash received (paid) on settlement of derivative contracts, (gain) loss on sale of assets, transaction costs, legal settlements, consent solicitation costs, severance, loss on extinguishment of debt and other various non-cash items (including non-cash portion of noncontrolling interest and stock-based compensation). Pro forma adjusted EBITDA, as presented herein, is adjusted EBITDA excluding adjusted EBITDA attributable to properties or subsidiaries sold during the period.

Adjusted operating cash flow and adjusted EBITDA are supplemental financial measures used by the Company’s management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the Company’s ability to internally fund exploration and development activities and to service or incur additional debt. The Company also uses these measures because adjusted operating cash flow and adjusted EBITDA relate to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. Further, adjusted operating cash flow and adjusted EBITDA allow the Company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. These measures should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles (“GAAP”). Adjusted EBITDA should not be considered as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Therefore, the Company’s adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Management also uses the supplemental financial measure of adjusted net income, which excludes tax (benefit) expense adjustment, asset impairment, (gain) loss on derivative contracts net of cash received (paid) on settlement of derivative contracts, (gain) loss on sale of assets, transaction costs, legal settlements, consent solicitation costs, loss on extinguishment of debt, severance and other non-cash items from income available (loss applicable) to common stockholders. Management uses this financial measure as an indicator of the Company’s operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net income is not a measure of financial performance under GAAP and should not be considered a substitute for loss applicable to common stockholders.

The supplemental measure of adjusted net income attributable to noncontrolling interest is used by the Company’s management to measure the impact on the Company’s financial results of the ownership by third parties of interests in the Company’s less than wholly-owned consolidated subsidiaries. Adjusted net income attributable to noncontrolling interest excludes the portion of asset impairment, (gain) loss on derivative contracts net of cash (paid) received on settlement of derivative contracts, legal settlement and loss on sale of assets attributable to third-party ownership in less than wholly-owned consolidated subsidiaries from net loss attributable to noncontrolling interest. Adjusted net income attributable to noncontrolling interest is not a measure of financial performance under GAAP and should not be considered a substitute for net income attributable to noncontrolling interest.

The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net income available to common stockholders and adjusted net income attributable to noncontrolling interest.

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Operating Cash Flow

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013 (restated)

2014

2013 (restated)

(in thousands)

Net cash provided by operating activities

$          164,892

$          210,324

$           395,684

$           595,007

Add (deduct)

Cash (paid) received on financing derivatives

–

(629)

(44,128)

5,099

Changes in operating assets and liabilities

37,881

17,483

157,615

(31,150)

Adjusted operating cash flow

$          202,773

$          227,178

$           509,171

$           568,956

 

Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013 (restated)

2014

2013 (restated)

(in thousands)

Net income (loss)

$          157,338

$           (81,447)

$           (11,892)

$          (597,251)

Adjusted for

Income tax (benefit) expense

(1,064)

2,363

(2,131)

7,300

Interest expense (1)

59,893

61,793

184,234

212,436

Depreciation and amortization – other

14,417

15,270

45,350

46,628

Depreciation and depletion – oil and natural gas

112,569

137,639

325,021

434,068

Accretion of asset retirement obligations

1,116

8,472

7,927

28,051

EBITDA

344,269

144,090

548,509

131,232

Asset impairment

54

687

167,966

16,330

Interest income

(110)

(408)

(545)

(1,587)

Stock-based compensation

3,438

5,135

12,010

22,769

(Gain) loss on derivative contracts

(132,575)

132,808

(4,792)

70,051

Cash received (paid) upon settlement of derivative contracts (2)

3,445

(12,496)

(23,382)

18,396

Other non-cash expense (income)

533

(328)

(1,044)

(276)

(Gain) loss on sale of assets (3)

(995)

539

(978)

398,364

Transaction costs

162

589

399

2,218

Legal settlements

–

–

23

1,081

Consent solicitation costs

146

1,516

323

22,335

Effect of Annual Incentive Plan adoption

–

–

–

14,735

Severance

5

2,258

8,927

120,375

Loss on extinguishment of debt

–

–

–

82,005

Non-cash portion of noncontrolling interest (4)

6,594

(30,174)

(58,518)

(132,095)

Adjusted EBITDA

$          224,966

$          244,216

$           648,898

$           765,933

Pro forma adjustments

Less EBITDA attributable to

Permian properties sold (2013)

–

–

–

(50,574)

Gulf of Mexico properties sold (2014)

–

(84,427)

(53,376)

(296,946)

Pro forma adjusted EBITDA

$          224,966

$          159,789

$           595,522

$           418,413

(1)

Excludes unrealized gains on interest rate swaps of $2.4 million for the nine-month period ended September 30, 2013.

(2)

Excludes amounts paid upon early settlement of derivative contracts.

(3)

Includes loss on the Permian divestiture of approximately $398.9 million for the nine-month period ended September 30, 2013.

(4)

Represents depreciation and depletion, impairment, loss on sale of Permian Properties (2013), (gain) loss on commodity derivative contracts net of cash (paid) received on settlement, legal settlement and income tax expense attributable to noncontrolling interests.

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013 (restated)

2014

2013 (restated)

(in thousands)

Net cash provided by operating activities

$          164,892

$          210,324

$           395,684

$           595,007

Changes in operating assets and liabilities

37,881

17,483

157,615

(31,150)

Interest expense (1)

59,893

61,793

184,234

212,436

Cash paid on early settlement of derivative contracts

–

–

25,434

29,300

Transaction costs

162

589

399

2,218

Legal settlements

–

–

23

1,081

Consent solicitation costs

146

1,516

323

22,335

Effect of Annual Incentive Plan adoption

–

–

–

14,735

Severance

(168)

598

6,775

65,685

Noncontrolling interest – SDT (2)

(5,670)

(8,841)

(17,361)

(32,109)

Noncontrolling interest – SDR (2)

(9,201)

(15,648)

(32,251)

(52,664)

Noncontrolling interest – PER (2)

(18,697)

(21,908)

(58,635)

(56,751)

Noncontrolling interest – Other (2)

–

31

(4)

36

Other non-cash items

(4,272)

(1,721)

(13,338)

(4,226)

Adjusted EBITDA

$          224,966

$          244,216

$           648,898

$           765,933

(1)

Excludes unrealized gains on interest rate swaps of $2.4 million for the nine-month period ended September 30, 2013.

(2)

Excludes depreciation and depletion, impairment, loss on sale of Permian Properties (2013), (gain) loss on commodity derivative contracts net of cash (paid) received on settlement, legal settlement and income tax expense attributable to noncontrolling interests.

Reconciliation of Income Available (Loss Applicable) to Common Stockholders to Adjusted Net Income Available to Common Stockholders

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013 (restated)

2014

2013 (restated)

(in thousands)

Income available (loss applicable) to common stockholders

$          145,957

$           (95,328)

$           (51,036)

$          (638,895)

Tax (benefit) expense adjustment

(1,160)

687

(1,160)

4,702

Asset impairment (1)

54

687

138,093

16,330

(Gain) loss on derivative contracts (1)

(116,719)

112,580

(7,608)

53,403

Cash received (paid) upon settlement of derivative contracts (1)

4,079

(8,695)

(18,501)

18,255

(Gain) loss on sale of assets (1)

(995)

575

(978)

326,660

Transaction costs

162

589

399

2,218

Legal settlements (1)

–

–

23

729

Consent solicitation costs

146

1,516

323

22,335

Effect of Annual Incentive Plan adoption

–

–

–

14,735

Severance

5

2,258

8,927

120,375

Loss on extinguishment of debt

–

–

–

82,005

Other non-cash income

(3)

–

(1,690)

(2,549)

Effect of income taxes

55

2,918

3,235

2,929

Adjusted net income available to common stockholders

31,581

17,787

70,027

23,232

Preferred stock dividends

11,381

13,881

39,144

41,644

Total adjusted net income

$            42,962

$            31,668

$           109,171

$            64,876

Weighted average number of common shares outstanding

Basic

485,458

483,582

485,194

480,209

Diluted (2)

575,912

573,716

578,125

571,354

Total adjusted net income

Per share – basic

$                0.07

$                0.04

$                0.14

$                0.05

Per share – diluted

$                0.07

$                0.06

$                0.19

$                0.11

(1)

Excludes amounts attributable to noncontrolling interests.

(2)

Weighted average fully diluted common shares outstanding for certain periods presented includes shares that are considered antidilutive for calculating earnings per share in accordance with GAAP.

Reconciliation of Net Income Attributable to Noncontrolling Interest to Adjusted Net Income Attributable to Noncontrolling Interest

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

(in thousands)

Net income attributable to noncontrolling interest

$            40,162

$            16,191

$            49,733

$              9,393

Asset impairment

–

–

29,873

–

Loss on sale of assets – Permian

–

(36)

–

71,704

Legal settlement

–

–

–

352

(Gain) loss on derivative contracts

(15,856)

20,228

2,816

16,648

Cash (paid) received on settlement of derivative contracts

(634)

(3,801)

(4,881)

141

Adjusted net income attributable to noncontrolling interest

$            23,672

$            32,582

$            77,541

$            98,238

Conference Participation

SandRidge Energy, Inc. will participate in the following upcoming events:

  • January 8, 2015 – Goldman Sachs’ Global Energy Conference; Miami, FL
  • January 14, 2015 – Global Hunter Securities’ Southern California Energy 1×1 Day; Los Angeles, CA
  • March 24, 2015 – Howard Weil Energy Conference; New Orleans, LA

At 8:00 am Central Time on the day of each presentation, the corresponding slides and any webcast information will be accessible on the Investor Relations portion of the Company’s website atwww.sandridgeenergy.com. Please check the website for updates regularly as this schedule is subject to change. Also, please note that SandRidge Energy, Inc. intends for its website to be used as a reliable source of information for all future events in which it may participate as well as updated presentations regarding the Company. Slides and webcasts (where applicable) will be archived and available for at least 30 days after each use or presentation.

Fourth Quarter 2014 Earnings Release and Conference Call

February 26, 2015 (Thursday) – Earnings press release after market close
February 27, 2015 (Friday) – Earnings conference call at 8:00 am CST

 

SANDRIDGE ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013 (restated)

2014

2013 (restated)

(Unaudited)

Revenues

Oil, natural gas and NGL

$         359,613

$         459,211

$      1,104,835

$      1,391,510

Drilling and services

21,348

16,149

57,280

49,597

Midstream and marketing

11,922

14,624

44,706

42,854

Construction contract

–

–

–

23,253

Other

1,224

3,619

5,056

11,066

Total revenues

394,107

493,603

1,211,877

1,518,280

Expenses

Production

82,664

124,571

256,473

389,911

Production taxes

8,380

8,816

24,027

24,819

Cost of sales

15,992

13,773

38,942

45,438

Midstream and marketing

11,405

13,224

40,659

39,954

Construction contract

–

–

–

23,253

Depreciation and depletion – oil and natural gas

112,569

137,639

325,021

434,068

Depreciation and amortization – other

14,417

15,270

45,350

46,628

Accretion of asset retirement obligations

1,116

8,472

7,927

28,051

Impairment

54

687

167,966

16,330

General and administrative

24,584

37,714

86,115

172,301

Employee termination benefits

5

2,256

8,927

120,374

(Gain) loss on derivative contracts

(132,575)

132,808

(4,792)

70,051

(Gain) loss on sale of assets

(995)

539

(978)

398,364

Total expenses

137,616

495,769

995,637

1,809,542

Income (loss) from operations

256,491

(2,166)

216,240

(291,262)

Other income (expense)

Interest expense

(59,783)

(61,385)

(183,689)

(208,454)

Loss on extinguishment of debt

–

–

–

(82,005)

Other (expense) income, net

(273)

658

3,159

1,163

Total other expense

(60,056)

(60,727)

(180,530)

(289,296)

Income (loss) before income taxes

196,435

(62,893)

35,710

(580,558)

Income tax (benefit) expense  

(1,064)

2,363

(2,131)

7,300

Net income (loss) 

197,499

(65,256)

37,841

(587,858)

Less: net income attributable to noncontrolling interest

40,161

16,191

49,733

9,393

Net income (loss) attributable to SandRidge Energy, Inc.

157,338

(81,447)

(11,892)

(597,251)

Preferred stock dividends 

11,381

13,881

39,144

41,644

Income available (loss applicable) to SandRidge Energy, Inc. 

common stockholders

$         145,957

$          (95,328)

$          (51,036)

$        (638,895)

Income (loss) per share

Basic

$              0.30

$             (0.20)

$             (0.11)

$             (1.33)

Diluted

$              0.27

$             (0.20)

$             (0.11)

$             (1.33)

Weighted average number of common shares outstanding

Basic

485,458

483,582

485,194

480,209

Diluted

575,911

483,582

485,194

480,209

 

SANDRIDGE ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

September 30,

December 31,

2014

2013 (revised)

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$         590,246

$         814,663

Accounts receivable, net

330,543

349,218

Derivative contracts

53,919

12,779

Prepaid expenses

6,794

39,253

Other current assets

23,223

25,910

Total current assets

1,004,725

1,241,823

Oil and natural gas properties, using full cost method of accounting

Proved 

11,252,074

10,972,816

Unproved

300,224

531,606

Less: accumulated depreciation, depletion and impairment

(6,250,457)

(5,762,969)

5,301,841

5,741,453

Other property, plant and equipment, net

578,864

566,222

Derivative contracts

15,891

14,126

Other assets

77,068

121,171

Total assets

$      6,978,389

$      7,684,795

LIABILITIES AND EQUITY

Current liabilities

Accounts payable and accrued expenses

$         652,649

$         812,488

Derivative contracts

–

34,267

Asset retirement obligations

–

87,063

Other current liabilities

18,549

–

Total current liabilities

671,198

933,818

Long-term debt

3,195,301

3,194,907

Derivative contracts

–

20,564

Asset retirement obligations

57,696

337,054

Other long-term obligations

16,418

22,825

Total liabilities

3,940,613

4,509,168

Commitments and contingencies

Equity

SandRidge Energy, Inc. stockholders’ equity

Preferred stock, $0.001 par value, 50,000 shares authorized

8.5% Convertible perpetual preferred stock; 2,650 shares issued and outstanding at September 30,

 2014 and December 31, 2013; aggregate liquidation preference of $265,000

3

3

6.0% Convertible perpetual preferred stock; 2,000 shares issued and outstanding at September 30,

 2014 and December 31, 2013; aggregate liquidation preference of $200,000

2

2

7.0% Convertible perpetual preferred stock; 3,000 shares issued and outstanding at September 30,

 2014 and December 31, 2013; aggregate liquidation preference of $300,000

3

3

Common stock, $0.001 par value, 800,000 shares authorized; 491,262 issued and 490,224 outstanding at

September 30, 2014 and 491,609 issued and 490,290 outstanding at December 31, 2013

483

483

Additional paid-in capital

5,292,874

5,298,301

Additional paid-in capital – stockholder receivable

(3,750)

(3,750)

Treasury stock, at cost

(6,823)

(8,770)

Accumulated deficit

(3,511,498)

(3,460,462)

Total SandRidge Energy, Inc. stockholders’ equity

1,771,294

1,825,810

Noncontrolling interest

1,266,482

1,349,817

Total equity

3,037,776

3,175,627

Total liabilities and equity

$      6,978,389

$      7,684,795

 

SANDRIDGE ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended September 30, 

2014

2013 (restated)

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$           37,841

$        (587,858)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Depreciation, depletion and amortization

370,371

480,696

Accretion of asset retirement obligations

7,927

28,051

Impairment

167,966

16,330

Debt issuance costs amortization

7,045

7,730

Amortization of discount, net of premium, on long-term debt

394

913

Loss on extinguishment of debt

–

82,005

Deferred income tax provision

–

4,702

(Gain) loss on derivative contracts

(4,792)

70,051

Cash paid on settlement of derivative contracts

(48,816)

(17,943)

(Gain) loss on sale of assets

(978)

398,364

Stock-based compensation

15,853

79,317

Other

488

1,499

Changes in operating assets and liabilities 

(157,615)

31,150

Net cash provided by operating activities

395,684

595,007

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures for property, plant and equipment

(1,071,465)

(1,163,539)

Acquisitions of assets

(16,920)

(15,527)

Proceeds from sale of assets

714,294

2,567,355

Net cash (used in) provided by investing activities

(374,091)

1,388,289

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of borrowings

–

(1,115,500)

Premium on debt redemption

–

(61,997)

Debt issuance costs

–

(91)

Proceeds from sale of royalty trust units

22,119

28,985

Noncontrolling interest distributions

(150,440)

(153,002)

Acquisition of ownership interest

(2,730)

–

Stock-based compensation excess tax benefit

14

(4)

Purchase of treasury stock

(8,278)

(31,270)

Repurchase of common stock

(17,542)

–

Dividends paid – preferred

(45,025)

(45,025)

Cash (paid) received on settlement of financing derivative contracts

(44,128)

5,099

Net cash used in financing activities

(246,010)

(1,372,805)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(224,417)

610,491

CASH AND CASH EQUIVALENTS, beginning of year

814,663

309,766

CASH AND CASH EQUIVALENTS, end of period

$         590,246

$         920,257

Supplemental Disclosure of Cash Flow Information

Cash paid for interest, net of amounts capitalized

$        (209,939)

$        (248,233)

Cash paid for income taxes

$               (543)

$            (2,911)

Supplemental Disclosure of Noncash Investing and Financing Activities

Deposit on pending sale

$                     –

$        (255,000)

Change in accrued capital expenditures

$          (49,072)

$            65,087

Asset retirement costs capitalized

$              3,398

$              4,145

 

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