SandRidge Energy, Inc. Reports Financial and Operational Results for Fourth Quarter and Full Year of 2017
OKLAHOMA CITY, Feb. 21, 2018 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE:SD) today announced financial and operational results for the quarter and fiscal year ended December 31, 2017. Additionally, the Company will host a conference call to discuss these results on February 22, at 8:00 a.m. CT (833-245-9650, International: 647-689-4222 - passcode: 4489951). Presentation slides will be available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Presentations & Events.
Highlights During 2017 Include:
Net Income of $47 Million and Adjusted Net Income of $52 Million for 2017
EBITDA of $175 Million and Adjusted EBITDA of $193 Million for 2017
Proved Reserves at Year End 2017 of 178 MMBoe with 17% Increase in Proved Oil Reserves Over Year End 2016
SEC Total Proved PV-10 of $749 Million ($835 Million Using Year End Strip Pricing), 71% Increase Over Year End 2016
Production of 14.9 MMBoe at High End of Guidance for 2017
Oil Production Increase of 73 MBo or 8% in Fourth Quarter 2017 Over Third Quarter 2017
Bill Griffin, President and CEO said, "SandRidge enters 2018 with a revised strategy and strong platform for economic growth. I step into this role with a full and determined commitment to work diligently with our veteran, senior executive team to quickly implement the announced G&A reductions, while maintaining core competencies and shifting organizational focus. 2017 was a year of solid operating performance, delivering within, or exceeding our production and cost guidance. Importantly, the NPV-10 of our total proved reserve base increased to $835 million when utilizing year-end strip pricing. SandRidge has tremendous potential moving forward. We are taking steps for meaningful improvements in our cash flow margins and we have a significant undeveloped acreage position and prospect inventory. These facts, in combination with a strong and clean balance sheet, give us significant optionality to capture the most attractive opportunities and create meaningful value."
Financial Results
Fourth Quarter
For the fourth quarter, the Company reported a net loss of $19 million, or $0.54 per share, and net cash provided by operating activities of $33 million. When adjusting these reported amounts for items that are typically excluded by the investment community on the basis that such items affect the comparability of results, the Company's "adjusted net income" amounted to $12 million, or $0.34 per share, and "operating cash flow" totaled $41 million. Earnings before interest, income taxes, depreciation, depletion, and amortization, adjusted for certain other items, otherwise referred to as "adjusted EBITDA," for the fourth quarter was $49 million.((1))
Full Year
For the full year of 2017, the Company reported net income of $47 million, or $1.44 per share, and net cash provided by operating activities of $181 million. Adjusted net income amounted to $52 million, or $1.61 per share, and operating cash flow totaled $183 million. Adjusted EBITDA for the full year was $193 million. ((1))
1) The Company has defined and
reconciled certain non-GAAP
financial measures including
adjusted net income,
operating cash flow, EBITDA,
adjusted EBITDA, PV-10 and
adjusted G&A expense and
current net debt, to the most
directly comparable GAAP
financial measures in
supporting tables at the
conclusion of this press
release under the "Non-GAAP
Financial Measures" beginning
on page 15.
Liquidity & Capital Structure
As of February 15, 2018, the Company's total liquidity was $496 million, which includes $78 million of cash and $418 million capacity under the credit facility, net of outstanding letters of credit.
The Company currently has no funds drawn under its credit facility and has provided notice that it intends to repay in full its $38 million building note on February 24, 2018. Interest on the building note is scheduled to increase from 8% to 10% in October 2018. Following repayment of the building note, the Company will have no outstanding long-term debt.
Hedging
For 2018, 86% of the Company's expected liquids production is hedged (at the midpoint of guidance) using derivative instruments for approximately 3.8 million barrels of oil at an average NYMEX WTI price of $55.75. In light of the high correlation between NGL and NYMEX WTI prices, the Company manages a portion of its NGL price exposure using NYMEX WTI contracts at a three-to-one (3:1) NGL to crude ratio. For 2018, the Company also has approximately 17.3 billion cubic feet of natural gas (54% of the midpoint of our guidance) hedged at an average price of $3.16 per MMBtu. For 2019, the Company has approximately 1.8 million barrels of oil hedged at an average WTI price of $54.29.
Operational Results and Activity
Production totaled 3.5 MMBoe (29% oil, 22% NGLs and 49% natural gas) for the fourth quarter, and 14.9 MMBoe for the full year of 2017, at the high end of guidance (14.2-14.9 MMBoe). Oil production grew 8% during the fourth quarter to 1,027 MBo from 954 MBo in the third quarter. The Company averaged two rigs in the NW STACK targeting the Meramec and one rig targeting multiple benches of the Niobrara in the North Park Basin during the quarter. Capital expenditures were $80 million during the quarter, bringing the total for the year to $248 million (excluding acquisitions) compared to 2017 guidance of $250-260 million.
Mid-Continent Assets in Oklahoma and Kansas
In the fourth quarter, production in the Mid-Continent totaled 3.2 MMBoe (23% oil). The Company averaged two rigs in the NW STACK targeting the Meramec and drilled three wells (two SRLs and one XRL). Of the three wells drilled, two were under the previously announced Drilling Participation Agreement. The Company brought eight wells online (six SRLs and two XRLs), and the wells with available 30-Day IPs averaged 565 Boepd (72% oil) for SRLs and 770 Boepd (73% oil) for XRLs.
In 2017, the Company drilled eight XRLs and nine SRLs in the NW STACK targeting the Meramec with one to two rigs. Of the 17 wells drilled, three were under the Drilling Participation Agreement that primarily covers Major and Woodward counties. Drilling and completion costs for SRLs and XRLs are currently $4.4 million and $6.5 million, respectively.
Niobrara Asset in North Park Basin, Jackson County, Colorado
Oil production in the North Park Basin totaled 201 MBo for the fourth quarter. During the quarter, the Company averaged one rig targeting multiple benches in the Niobrara, drilled three XRLs and brought three XRLs online. Two of the XRLs brought online had available 30-Day IPs averaging 1,109 Boepd (91% oil).
In 2017, the Company drilled eight XRLs and brought five wells to sales with one rig in North Park, confirming all four Niobrara benches (A, B, C and D) productive. Commercial productivity was confirmed in the B, C and D benches, while further determination of the A bench commerciality is ongoing. The Company has drilled the first four wells of an eight well spacing test, evaluating the B, C and D benches in a wine rack configuration. The Company will drill the remaining four wells of the test during the second quarter of 2018.
Other Operational Activities
During the fourth quarter, Permian Central Basin Platform properties produced 119 MBoe (1.3 MBoepd, 81% oil, 12% NGLs, 7% natural gas).
Year End 2017 Estimated Proved Reserves
The Company's total estimated SEC proved reserves as of December 31, 2017 were 178 MMBoe, an increase of 8% year over year. Reserves increased due to reserve additions and pricing revisions, with a 130% reserve replacement ratio (excluding pricing adjustments). SEC proved reserves PV-10 was $749 million, an increase of 71% year over year. SEC pricing used in the preparation of the December 31, 2017 reserves was $51.34 per Bbl for oil and $2.98 per MMBtu for natural gas, before adjustments.
For comparative purposes, utilizing NYMEX forward closing prices for oil and natural gas on December 29, 2017 (the last trading day of 2017), total NYMEX strip-based proved reserves at December 31, 2017 were 181 MMBoe, with a PV-10 of $835 million. NYMEX strip-based proved reserves are calculated based on the SEC proved reserves estimation methodology, but applying NYMEX strip prices rather than SEC pricing. NYMEX strip-based PV-10 uses annual average prices for oil and natural gas shown in the NYMEX Strip Pricing table below.
Oil MBbls NGLs MBbls Gas MMcf Equivalent Standardized
MBoe(1) Measure /PV-
10 $MM
======
Proved
Reserves,
December 31,
2016 52,884 33,607 464,782 163,955 $438
Revisions 804 2,628 44,679 10,879
Purchases 18 70 683 202
Extensions &
Additions 12,446 1,914 30,080 19,373
Sales of
Assets (204) (529) (7,055) (1,909)
Production (4,157) (3,376) (44,237) (14,906)
Proved
Reserves,
December 31,
2017 61,791 34,314 488,932 177,594 $749
====== ====== ======= =======
1)
Equivalent
Boe are
calculated
using an
energy
equivalent
ratio of
six Mcf of
natural gas
to one Bbl
of oil.
Using an
energy-
equivalent
ratio does
not factor
in price
differences
and energy-
equivalent
prices may
differ
significantly
among
produced
products.
SEC Proved Reserves and NYMEX Strip-Based Proved Reserves
YE 2017@SEC Pricing(1) YE 2017@ NYMEX Strip Pricing(2)
--------------------- ------------------------------
Equivalent MBoe Standardized Equivalent MBoe PV-10 $MM
measure / PV-10
$MM
===
Developed 123,765 $574 126,675 $630
Undeveloped 53,829 $175 53,905 $206
Total Proved 177,594 $749 180,580 $835
1) SEC Pricing remains flat for
reserve life at $51.34/Bo &
$2.98/MMBtu
2) NYMEX Strip pricing as of
December 29, 2017, shown in
table below
NYMEX Strip Pricing
(as of 12/29/2017)
Year Oil Gas
---- --- ---
2017 $50.96 $3.11
2018 $59.40 $2.83
2019 $55.94 $2.81
2020 $53.60 $2.82
2021 $52.20 $2.85
2022 $51.66 $2.89
2023+ $52.44 $3.08
2018 Operational and Capital Expenditure Guidance
The Company is currently running one drilling rig in the NW STACK under its Drilling Participation Agreement as well as one rig in the North Park Basin. Capital allocation opportunities based on total return are also under review to exploit high-graded Mississippian Lime locations. The 2018 capital expenditure guidance range is $180 - $190 million. As previously announced, the Company is in the process of instituting changes in its organizational structure to efficiently execute its strategic objectives. These changes are expected to reduce ongoing G&A cash expenses by one-third to $36 - $39 million per year. At these new levels of expense, G&A cash expenses will have been cut by more than half since the Company's emergence from bankruptcy in October 2016. Production and other operational guidance detail for the full year of 2018 can be found below.
Guidance
--------
Projection as of
February 21, 2018
Production
----------
Oil (MMBbls) 3.4 - 3.6
Natural Gas Liquids (MMBbls) 2.6 - 2.8
---------
Total Liquids (MMBbls) 6.0 - 6.4
Natural Gas (Bcf) 31.5 - 33.0
-----------
Total (MMBoe) 11.3 - 11.9
Price Realization
-----------------
Oil (per Bbl) $2.80
Natural Gas Liquids (realized % of
NYMEX WTI) 33%
Natural Gas (per MMBtu) $1.20
Expenses
--------
LOE $95 - $105 million
Adjusted G&A Expense(1) $41 - $44 million
% of Revenue
------------
Production Taxes 4.80%
Capital Expenditures ($ in millions)
-----------------------------------
Drilling and Completion
-----------------------
Mid-Continent $6 - $8
North Park Basin 76 - 84
Other(2) 34
---
Total Drilling and Completion $116 - $126
Other E&P
---------
Land, G&G, and Seismic $15
Infrastructure(3) 15
Workover 25
Capitalized G&A and Interest 8
---
Total Other Exploration and Production $63
General Corporate 1
---
Total Capital Expenditures $180 - $190
(excluding acquisitions and plugging and abandonment)
1) Adjusted G&A expense is a non-
GAAP financial measure. The
Company has defined this measure
at the conclusion of this press
release under "Non-GAAP
Financial Measures" beginning on
page 15. Information to
reconcile this non-GAAP
financial measure to the most
directly comparable GAAP
financial measure is not
available at this time, as
management is unable to forecast
the excluded items for future
periods.
2) Primarily 2017 Carryover
3) Includes Production facilities,
Pipeline ROW and Electrical
2017 Actual Results vs. 2017 Capital Expenditure and Operational Guidance
The table below presents the actual results of the Company's operations and capital expenditures for the full year of 2017 in comparison to its previous guidance, provided on November 1, 2017.
FY 2017 Actuals FY 2017 Delta
Guidance
(Midpoint)
---------
Production
----------
Oil (MMBbls) 4.2 4.2 0.0
Natural Gas Liquids (MMBbls) 3.4 3.2 0.2
--- --- ---
Total Liquids (MMBbls) 7.6 7.4 0.2
Natural Gas (Bcf) 44.2 42.8 1.5
==== ==== ===
Total (MMBoe) 14.9 14.5 0.4
Cost per Boe
------------
LOE $6.89 $7.08 (0.19)
Adjusted G&A Expense(1) $3.72 $4.10 (0.38)
Capital Expenditures ($ in Millions)
-----------------------------------
Drilling and Completion
-----------------------
Mid-Continent $66 $63 $3
North Park Basin 56 63 (6)
Other(2) 22 20 2
--- --- ---
Total Drilling and Completion 144 145 (1)
Other E&P
---------
Land, G&G, and Seismic 48 46 2
Infrastructure(3) 15 18 (3)
Workovers 28 30 (2)
Capitalized G&A and Interest 12 14 (2)
--- --- ---
Total Other Exploration and
Production 102 108 (6)
General Corporate 1 2 (1)
Total Capital Expenditures
(excluding acquisitions and
plugging and abandonment) $248 $255 $(7)
==== ==== ===
1) Adjusted
G&A expense
is a non-
GAAP
financial
measure. The
Company has
defined this
measure at
the
conclusion
of this
press
release
under the
"Non-GAAP
Financial
Measures"
beginning on
page 15.
Information
to reconcile
this non-
GAAP
financial
measure to
the most
directly
comparable
GAAP
financial
measure is
not
available at
this time,
as
management
is unable to
forecast the
excluded
items for
future
periods.
2) 2016
Carryover,
Coring, Non-
Op and SWD
3) Includes
Production
facilities,
Pipeline ROW
and
Electrical
Operational and Financial Statistics
Upon emergence from Chapter 11 reorganization on October 4, 2016, the Company elected to adopt fresh start accounting effective October 1, 2016. As a result of the application of fresh start accounting and the effects of the implementation of the plan of reorganization, the financial statements on or after October 1, 2016 are not comparable with the financial statements prior to that date. References to the "Successor" refer to SandRidge subsequent to adoption of fresh start accounting. References to the "Predecessor" refer to SandRidge prior to adoption of fresh start accounting.
Information regarding the Company's production, pricing, costs and earnings is presented below:
Successor Successor Predecessor
--------- -----------
Three Months Year Ended Combined Period from Period from
Ended Year Ended October 2, January 1,
December 31, 2016 through 2016 through
2016 December 31, October 1,
2016 2016
---- ----
December 31, 2017
Production -
Total
Oil (MBbl) 1,027 4,157 5,529 1,214 4,315
NGL (MBbl) 775 3,376 4,357 999 3,358
Natural Gas
(MMcf) 10,354 44,237 56,895 12,771 44,124
Oil equivalent
(MBoe) 3,528 14,906 19,369 - 4,342 15,027
Daily production
(MBoed) 38.3 40.8 52.9 47.2 54.8
Average price per
unit
Realized oil
price per barrel
-as reported $53.31 $48.72 $39.09 $47.03 $36.85
Realized impact
of derivatives
per barrel (2.54) 1.03 12.74 7.56 14.20
---- ----- ---- -----
Net realized
price per barrel $50.77 $49.75 $51.83 $54.59 $51.05
====== ====== ====== ====== ======
Realized NGL
price per barrel
-as reported $23.69 $18.16 $13.15 $14.77 $12.67
Realized impact
of derivatives
per barrel - - - - -
--- --- --- --- ---
Net realized
price per barrel $23.69 $18.16 $13.15 $14.77 $12.67
====== ====== ====== ====== ======
Realized natural
gas price per
Mcf -as
reported $1.92 $2.09 $1.84 $2.07 $1.78
Realized impact
of derivatives
per Mcf 0.21 0.06 (0.03) (0.11) (0.01)
---- ---- ----- ----- -----
Net realized
price per Mcf $2.13 $2.15 $1.81 $1.96 $1.77
===== ===== ===== ===== =====
Realized price
per Boe -as
reported $26.35 $23.90 $19.53 $22.64 $18.63
====== ====== ====== ====== ======
Net realized
price per Boe -
including impact
of derivatives $26.23 $24.38 $23.08 $24.41 $22.70
====== ====== ====== ====== ======
Average cost per
Boe
Lease operating
(1) $7.29 $6.89 $7.98 $5.76 $8.63
Production taxes $1.19 $0.92 $0.45 $0.61 $0.41
Depletion (2) $8.66 $7.92 $6.56 $8.31 $6.05
Earnings per
share
(Loss) earnings
per share
applicable to
common
stockholders
Basic $(0.54) $1.45 $(17.61) $2.01
Diluted $(0.54) $1.44 $(17.61) $2.01
Adjusted net
income (loss)
per share
available to
common
stockholders
Basic $0.34 $1.62 $1.53 $(0.13)
Diluted $0.34 $1.61 $0.86 $(0.13)
Weighted average
number of shares
outstanding (in
thousands)
Basic 34,494 32,442 18,967 708,928
Diluted (3) 34,547 32,663 33,573 708,928
(1) Transportation costs are presented
as a reduction of revenue by the
Successor Company compared to the
Predecessor Company's presentation
of these costs as lease operating
expenses.
(2) Includes accretion of asset
retirement obligation.
(3) Includes shares considered
antidilutive for calculating loss
per share in accordance with GAAP.
Capital Expenditures
The table below presents actual results of the Company's capital expenditures for the three months and full year periods ended December 31, 2017 at the same level of detail as its full year capital expenditure guidance.
Three Months Ended Year Ended
December 31, 2017 December 31, 2017
----------------- -----------------
(In thousands) (In thousands)
Drilling
and
Completion
----------
Mid-
Continent $18,312 $65,959
North
Park
Basin 31,449 56,230
Other(1) 3,870 22,245
Total
Drilling
and
Completion 53,631 144,435
Other
E&P
-----
Land,
G&G,
and
Seismic 7,718 47,633
Infrastructure(2) 9,970 14,759
Workovers 6,241 27,908
Capitalized
G&A
and
Interest 2,748 12,151
Total
Other
Exploration
and
Production 26,677 102,452
General
Corporate (49) 1,358
Total
Capital
Expenditures $80,260 $248,244
------- --------
(excluding
acquisitions
and
plugging
and
abandonment)
1) 2016 Carryover, Coring, Non-
Op and SWD
2) Infrastructure -Production
facilities, Pipeline ROW and
Electrical
Derivative Contracts
The table below sets forth the Company's consolidated oil and natural gas price swaps for 2018 and 2019 as of February 21, 2018:
Quarter Ending
3/31/2018 6/30/2018 9/30/2018 12/31/2018 FY 2018
--------- --------- --------- ---------- -------
WTI Swaps:
Total Volume (MMBbls) 1.05 1.00 0.92 0.83 3.80
Daily Volume (MBblspd) 11.7 11.0 10.0 9.0 10.4
Swap Price ($/bbl) $55.46 $55.50 $56.04 $56.12 $55.75
Natural Gas Swaps:
Total Volume (Bcf) 6.30 3.64 3.68 3.68 17.30
Daily Volume (MMBtupd) 70.0 40.0 40.0 40.0 47.4
Swap Price ($/MMBtu) $3.24 $3.11 $3.11 $3.11 $3.16
3/31/2019 6/30/2019 9/30/2019 12/31/2019 FY 2019
--------- --------- --------- ---------- -------
WTI Swaps:
Total Volume (MMBbls) 0.45 0.46 0.46 0.46 1.83
Daily Volume (MBblspd) 5.0 5.0 5.0 5.0 5.0
Swap Price ($/bbl) $54.29 $54.29 $54.29 $54.29 $54.29
Capitalization
The Company's capital structure as of December 31, 2017 and December 31, 2016 is presented below:
December 31, December 31,
2017 2016
---- ----
(In thousands)
Cash, cash equivalents and restricted cash $101,308 $174,071
======== ========
Credit facility $ - $ -
Building note 37,502 36,528
Mandatorily convertible 0% notes - 268,780
Total debt 37,502 305,308
Stockholders' equity
Common stock 36 20
Warrants 88,500 88,381
Additional paid-in capital 1,038,324 758,498
Accumulated deficit (286,920) (333,982)
-------- --------
Total SandRidge Energy, Inc. stockholders' equity 839,940 512,917
Total capitalization $877,442 $818,225
======== ========
SandRidge Energy, Inc. and Subsidiaries Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Successor Predecessor
Year Ended Period from Period from Year Ended
December 31, October 2, 2016 January 1, 2016 December 31,
2017 through December 31, through 2015
2016 October 1, 2016
---
Revenues
Oil, natural gas and NGL $356,210 $98,307 $279,971 $707,434
Other 1,089 149 13,838 61,275
----- --- ------ ------
Total revenues 357,299 98,456 293,809 768,709
Expenses
Production 102,728 24,997 129,608 308,701
Production taxes 13,644 2,643 6,107 15,440
Depreciation and depletion-
oil and natural gas 118,035 36,061 90,978 324,390
Depreciation and
amortization-other 13,852 3,922 21,323 47,382
Impairment 4,019 319,087 718,194 4,534,689
General and administrative 76,024 9,837 116,091 137,715
Terminated merger costs 8,162 - - -
Employee termination
benefits 4,815 12,334 18,356 12,451
(Gain) loss on derivative
contracts (24,090) 25,652 4,823 (73,061)
Loss on settlement of
contract - - 90,184 50,976
Other operating expenses 479 268 4,348 52,704
--- --- ----- ------
Total expenses 317,668 434,801 1,200,012 5,411,387
------- ------- --------- ---------
Income (loss) from
operations 39,631 (336,345) (906,203) (4,642,678)
------ -------- -------- ----------
Other (expense) income
Interest expense (3,868) (372) (126,099) (321,421)
Gain on extinguishment of
debt - - 41,179 641,131
Gain on reorganization
items, net - - 2,430,599 -
Other income, net 2,550 2,744 1,332 2,040
----- ----- ----- -----
Total other (expense)
income (1,318) 2,372 2,347,011 321,750
------ ----- --------- -------
Income (loss) before income
taxes 38,313 (333,973) 1,440,808 (4,320,928)
Income tax (benefit)
expense (8,749) 9 11 123
------ --- --- ---
Net income (loss) 47,062 (333,982) 1,440,797 (4,321,051)
Less: net loss attributable
to noncontrolling interest - - - (623,506)
--- --- --------
Net income (loss)
attributable to SandRidge
Energy, Inc. 47,062 (333,982) 1,440,797 (3,697,545)
Preferred stock dividends - - 16,321 37,950
--- --- ------ ------
Income available (loss
applicable) to SandRidge
Energy, Inc. common
stockholders $47,062 $(333,982) $1,424,476 $(3,735,495)
======= ========= ========== ===========
Earnings (loss) per share
Basic $1.45 $(17.61) $2.01 $(7.16)
===== ======= ===== ======
Diluted $1.44 $(17.61) $2.01 $(7.16)
===== ======= ===== ======
Weighted average number of common shares
outstanding
Basic 32,442 18,967 708,928 521,936
====== ====== ======= =======
Diluted 32,663 18,967 708,928 521,936
====== ====== ======= =======
SandRidge Energy, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2017 2016
---- ----
ASSETS
Current assets
Cash and cash equivalents $99,143 $121,231
Restricted cash - collateral - 50,000
Restricted cash - other 2,165 2,840
Accounts receivable, net 71,277 74,097
Derivative contracts 1,310 -
Prepaid expenses 5,248 5,375
Other current assets 15,954 3,633
Total current assets 195,097 257,176
------- -------
Oil and natural gas properties, using full cost method of accounting
Proved (includes development and project costs excluded from amortization of $16.7
million at December 31, 2016) 1,056,806 840,201
Unproved 100,884 74,937
Less: accumulated depreciation, depletion and impairment (460,431) (353,030)
-------- --------
697,259 562,108
------- -------
Other property, plant and equipment, net 225,981 255,824
Other assets 1,290 6,284
Total assets $1,119,627 $1,081,392
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $139,155 $116,517
Derivative contracts 10,627 27,538
Asset retirement obligations 41,017 66,154
Other current liabilities 8,115 3,497
Total current liabilities 198,914 213,706
------- -------
Long-term debt 37,502 305,308
Derivative contracts 3,568 2,176
Asset retirement obligations 36,527 40,327
Other long-term obligations 3,176 6,958
----- -----
Total liabilities 279,687 568,475
------- -------
Commitments and contingencies (Note 15)
Stockholders' Equity
Common stock, $0.001 par value; 250,000 shares authorized; 35,650 issued and outstanding
at December 31, 2017 and 21,042 issued and 19,635 outstanding at December 31, 2016 36 20
Warrants 88,500 88,381
Additional paid-in capital 1,038,324 758,498
Accumulated deficit (286,920) (333,982)
-------- --------
Total stockholders' equity 839,940 512,917
Total liabilities and stockholders' equity $1,119,627 $1,081,392
========== ==========
SandRidge Energy, Inc. and Subsidiaries Condensed Consolidated Cash Flows
(In thousands)
Successor Predecessor
Year Ended Period from Period from Year Ended
December 31, October 2, 2016 January 1, 2016 December 31,
2017 through through October 1, 2015
December 31, 2016
2016
---
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $47,062 $(333,982) $1,440,797 $(4,321,051)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Provision for doubtful accounts 406 (13,166) 16,704 -
Depreciation, depletion and amortization 131,887 39,983 112,301 371,772
Impairment 4,019 319,087 718,194 4,534,689
Gain on reorganization items, net - - (2,442,436) -
Debt issuance costs amortization 430 - 4,996 11,884
Amortization of discount, net of premium,
on debt (330) (81) 2,734 3,130
Gain on extinguishment of debt - - (41,179) (641,131)
Write off of debt issuance costs - - - 7,108
(Gain) loss on debt derivatives - - (1,324) 10,377
Cash paid for early conversion of
convertible notes - - (33,452) (32,741)
(Gain) loss on derivative contracts (24,090) 25,652 4,823 (73,061)
Cash received on settlement of derivative
contracts 7,260 7,698 72,608 327,702
Loss on settlement of contract - - 90,184 50,976
Cash paid on settlement of contract - - (11,000) (24,889)
Stock-based compensation 15,750 6,250 9,075 18,380
Other 344 717 (3,260) 2,842
Changes in operating assets and liabilities increasing
(decreasing) cash
Deconsolidation of noncontrolling interest - - (9,654) -
Receivables 115 12,872 36,116 201,907
Prepaid expenses 127 (1,079) (5,681) 1,148
Other current assets 191 (260) (181) 12,710
Other assets and liabilities, net 4,186 1,505 (7,542) 2,239
Accounts payable and accrued expenses (2,199) 990 (3,595) (86,470)
Asset retirement obligations (3,979) (591) (61,305) (3,984)
------ ---- ------- ------
Net cash provided by (used in) operating
activities 181,179 65,595 (112,077) 373,537
------- ------ -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for property, plant
and equipment (219,246) (51,676) (186,452) (879,201)
Acquisitions of assets (48,312) - (1,328) (216,943)
Proceeds from sale of assets 21,834 11,841 20,090 56,504
------ ------ ------ ------
Net cash used in investing activities (245,724) (39,835) (167,690) (1,039,640)
-------- ------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - - 489,198 2,065,000
Repayments of borrowings - (414,954) (74,243) (939,466)
Debt issuance costs (1,488) - (333) (53,244)
Proceeds from building mortgage - - 26,847 -
Payment of mortgage proceeds and cash
recovery to debt holders - - (33,874) -
Noncontrolling interest distributions - - - (138,305)
Cash paid for tax withholdings on vested
stock awards (6,730) (110) (44) (3,535)
Dividends paid-preferred - - - (11,262)
Other - 3 - 1,250
--- --- --- -----
Net cash (used in) provided by financing
activities (8,218) (415,061) 407,551 920,438
------ -------- ------- -------
NET (DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS and RESTRICTED CASH (72,763) (389,301) 127,784 254,335
CASH, CASH EQUIVALENTS and RESTRICTED
CASH, beginning of year 174,071 563,372 435,588 181,253
------- ------- ------- -------
CASH, CASH EQUIVALENTS and RESTRICTED CASH
end of year $101,308 $174,071 $563,372 $435,588
======== ======== ======== ========
Conference Call Information
The Company will host a conference call to discuss these results on Thursday, February 22, 2018 at 8:00 am CT. The telephone number to access the conference call from within the U.S. is (833) 245-9650 and from outside the U.S. is (647) 689-4222. The passcode for the call is 4489951. An audio replay of the call will be available from February 22, 2018 until 11:59 pm CT on March 24, 2018. The number to access the conference call replay from within the U.S. is (800) 585-8367 and from outside the U.S. is (416) 621-4642. The passcode for the replay is 4489951.
A live audio webcast of the conference call will also be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Presentation & Events. The webcast will be archived for replay on the Company's website for 30 days.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in this press release, including reconciliations to their most directly comparable GAAP measure.
Reconciliation of Cash Provided by (Used in) Operating Activities to Operating Cash Flow
The Company defines operating cash flow as net cash provided by (used in) operating activities before changes in operating assets and liabilities, as shown in the following table. Operating cash flow is a supplemental financial measure 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 this measure because operating cash flow relates 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, operating cash flow allows the Company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. This measure should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with GAAP.
Successor Successor Predecessor
--------- -----------
Three Months Year Ended Combined Period from Period from
Ended Year Ended October 2, January 1,
December 31, 2016 through 2016 through
2016 December 31, October 1,
2016 2016
---- ----
December 31, 2017
-----------------
(In thousands)
Net cash
provided by
(used in)
operating
activities $33,273 $181,179 $(46,482) $65,595 $(112,077)
Changes in
operating
assets and
liabilities 7,258 1,559 37,759 (13,437) 51,196
----- ----- ------ ------- ------
Operating cash
flow $40,531 $182,738 $(8,723) $52,158 $(60,881)
======= ======== ======= ======= ========
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
The Company defines EBITDA as net (loss) income before income tax (benefit) expense, interest expense, depreciation and amortization - other and depreciation and depletion - oil and natural gas. Adjusted EBITDA, as presented herein, is EBITDA excluding items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are non-recurring, as shown in the following tables.
Adjusted EBITDA is presented because management believes it provides useful additional information used by the Company's management and by securities analysts, investors, lenders, ratings agencies and others who follow the industry, for analysis of the Company's financial and operating performance on a recurring basis and the Company's ability to internally fund exploration and development, and to service or incur additional debt. In addition, management believes that adjusted EBITDA is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry. The Company's adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
Successor Successor Predecessor
--------- -----------
Three Months Year Ended Combined Period from Period from
Ended Year Ended October 2, January 1,
December 31, 2016 through 2016 through
2016 December 31, October 1,
2016 2016
---- ----
December 31, 2017
-----------------
(In thousands)
Net (loss) income $(18,760) $47,062 $1,106,815 $(333,982) $1,440,797
Adjusted for
Income tax (benefit)
expense (253) (8,749) 20 9 11
Interest expense 1,377 4,886 129,107 1,590 127,517
Depreciation and
amortization -other 3,123 13,852 25,245 3,922 21,323
Depreciation and depletion
-oil and natural gas 30,549 118,035 127,039 36,061 90,978
------ -------
EBITDA 16,036 175,086 1,388,226 (292,400) 1,680,626
Asset impairment 544 4,019 1,037,281 319,087 718,194
Stock-based compensation 3,134 13,923 6,257 1,966 4,291
Loss (gain) on derivative
contracts 21,934 (24,090) 30,475 25,652 4,823
Cash (paid) received upon
settlement of derivative
contracts (1) (440) 7,260 80,306 13,455 66,851
Loss on settlement of
contract - - 90,184 - 90,184
Restructuring costs (2) - 8,554 53,544 17,138 36,406
Drilling participation
agreement transaction
costs 20 2,901 - - -
Terminated merger costs 8,162 8,162 - - -
Oil field services -exit
costs - - 2,428 - 2,428
Gain on extinguishment of
debt - - (41,179) - (41,179)
Gain on reorganization
items, net - - (2,430,599) - (2,430,599)
Employee incentive and
retention - - 22,984 2,843 20,141
Other 92 (2,620) (1,840) (16,660) 14,820
Adjusted EBITDA $49,482 $193,195 $238,067 $71,081 $166,986
======= ======== ======== ======= ========
Excludes
amounts
received
for early
settlement
of
contracts
in the
year ended
December
(1) 31, 2016.
(2) Includes
severance.
Reconciliation of Cash Provided by (Used in) Operating Activities to Adjusted EBITDA
Successor Successor Predecessor
--------- -----------
Three Months Year Ended Combined Period from Period from
Ended Year Ended October 2, January 1,
December 31, 2016 through 2016 through
2016 December 31, October 1,
2016 2016
---- ----
December 31, 2017
-----------------
(In thousands)
Net cash provided by
(used in) operating
activities $33,273 $181,179 $(46,482) 65,595 $(112,077)
Changes in operating
assets and
liabilities 7,258 1,559 37,759 (13,437) 51,196
Interest expense 1,377 4,886 129,107 1,590 127,517
Cash received on
early settlement of
derivative
contracts - - (17,894) - (17,894)
Contractual maturity
reached on previous
early settlements - - 17,893 5,756 12,137
Cash paid on early
conversion of
convertible notes - - 33,452 - 33,452
Cash paid on
settlement of
contract - - 11,000 - 11,000
Gain on convertible
notes derivative
liability - - 1,324 - 1,324
Oil field services -
exit costs (1) - - 2,386 - 2,386
Restructuring costs
(1)(2) - 6,729 44,180 12,852 31,328
Drilling
participation
agreement
transaction costs 20 2,901 - - -
Income tax (benefit)
expense (253) (8,749) - - -
Terminated merger
costs 8,162 8,162 - - -
Cash paid for
reorganization
items - - 12,483 - 12,483
Employee incentive
and retention - - 22,984 2,843 20,141
Other (355) (3,472) (10,125) (4,118) (6,007)
Adjusted EBITDA $49,482 $193,195 $238,067 $71,081 $166,986
======= ======== ======== ======= ========
(1) Excludes associated stock-based
compensation.
(2) Includes severance.
Reconciliation of Net (Loss) Income Available to Common Stockholders to Adjusted Net Income Available to Common Stockholders
The Company defines adjusted net (loss) income as net (loss) income excluding items that the Company believes affect the comparability of operating results and are typically excluded from published estimates by the investment community, including items whose timing and/or amount cannot be reasonably estimated or are non-recurring, as shown in the following tables.
Management uses the supplemental measure of adjusted net (loss) income 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 (loss) income is not a measure of financial performance under GAAP and should not be considered a substitute for net (loss) income available to common stockholders.
Successor
Three Months Ended December 31, 2017 Year Ended December 31, 2017
$ $/Diluted Share $ $/Diluted Share
--- --------------- --- ---------------
(In thousands, except per share amounts)
Net (loss) income
available to
common
stockholders $(18,760) $(0.54) $47,062 $1.44
Asset impairment 544 0.02 4,019 0.12
Loss (gain) on
derivative
contracts 21,934 0.62 (24,090) (0.73)
Cash (paid)
received upon
settlement of
derivative
contracts (440) (0.01) 7,260 0.22
Restructuring
costs (1) - - 8,554 0.26
Drilling
participation
agreement
transaction costs 20 - 2,901 0.09
Terminated merger
costs 8,162 0.24 8,162 0.25
Other 246 0.01 (1,396) (0.04)
Adjusted net
income available
to common
stockholders $11,706 $0.34 $52,472 $1.61
======= ===== ======= =====
Basic Diluted (2) Basic Diluted (2)
----- ---------- ----- ----------
Weighted average
number of common
shares
outstanding 34,494 34,547 32,442 32,663
Total adjusted net
income per share $0.34 $0.34 $1.62 $1.61
===== ===== ===== =====
(1) Includes
severance.
(2) Weighted
average
fully
diluted
common
shares
outstanding
for certain
periods
presented
includes
shares that
are
considered
antidilutive
for
calculating
loss per
share in
accordance
with GAAP.
Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Net (Loss) Income Available to Common Stockholders
Combined Successor Predecessor
Year Ended
December 31,
2016
Period from October 2, 2016 Period from January 1, 2016
through December 31, 2016 through October 1, 2016
$ $ $/Diluted Share $ $/Diluted Share
--- --- --------------- --- ---------------
(In thousands, except per share amounts)
Net income (loss)
available to common
stockholders $1,090,494 $(333,982) $(9.95) $1,424,476 $2.01
Asset impairment 1,037,281 319,087 9.50 718,194 1.01
Loss on derivative
contracts 30,475 25,652 0.76 4,823 0.01
Cash received upon
settlement of
derivative contracts
(1) 80,306 13,455 0.40 66,851 0.09
Gain on convertible
notes derivative
liability (1,324) - - (1,324) -
Loss on settlement of
contract 90,184 - - 90,184 0.13
Restructuring costs
(2) 53,544 17,138 0.51 36,406 0.05
Oil field services -
exit costs 2,428 - - 2,428 -
Gain on extinguishment
of debt (41,179) - - (41,179) (0.06)
Gain on reorganization
items, net (2,430,599) - - (2,430,599) (3.43)
Employee incentive and
retention 22,984 2,843 0.08 20,141 0.03
Other 1,565 (15,171) (0.44) 16,736 0.03
Adjusted net (loss)
income available to
common stockholders $(63,841) $29,022 $0.86 $(92,863) $(0.13)
======== ======= ===== ======== ======
Basic Diluted (3) Basic Diluted (3)
----- ---------- ----- ----------
Weighted average
number of common
shares outstanding 18,967 33,573 708,928 708,928
Total adjusted net
income (loss) per
share $1.53 $0.86 $(0.13) $(0.13)
===== ===== ====== ======
(1) Excludes
amounts
received
for early
settlement
of
contracts
in the 2016
periods.
(2) Includes
severance.
(3) Weighted
average
fully
diluted
common
shares
outstanding
for certain
periods
presented
includes
shares that
are
considered
antidilutive
for
calculating
loss per
share in
accordance
with GAAP.
Reconciliation of G&A to Adjusted G&A
The Company reports and provides guidance on Adjusted G&A per Boe because it believes this measure is commonly used by management, analysts and investors as an indicator of cost management and operating efficiency on a comparable basis from period to period, compare and make investment recommendations of companies in the oil and gas industry. This non-GAAP measure allows for the analysis of general and administrative spend without regard to stock-based compensation programs, and other non-recurring cash items which can vary significantly between companies. Adjusted G&A per Boe is not a measure of financial performance under GAAP and should not be considered a substitute for general and administrative expense per Boe. Therefore, the Company's Adjusted G&A per Boe may not be comparable to other companies' similarly titled measures.
The Company defines adjusted G&A as general and administrative expense adjusted for certain non-cash stock-based compensation and other non-recurring items, as shown in the following tables.
Successor
Three Months Ended December 31, 2017 Year Ended December 31, 2017
$ $/Boe $ $/Boe
--- ----- --- -----
(In thousands, except per Boe amounts)
General and
administrative $16,840 $4.77 $76,024 $5.10
Stock-based
compensation (1) (3,134) (0.88) (13,925) (0.94)
Restructuring costs - - (3,739) (0.25)
Drilling
participation
agreement
transaction costs (20) (0.01) (2,901) (0.19)
Adjusted G&A $13,686 $3.88 $55,459 $3.72
======= ===== ======= =====
Combined Year Ended Successor Predecessor
December 31, 2016
-----------------
Period from October 2, 2016 Period from January 1, 2016
through December 31, 2016 through October 1, 2016
$ $/Boe $ $/Boe $ $/Boe
--- ----- --- ----- --- -----
(In thousands, except per Boe amounts)
General and
administrative $125,928 $6.50 $9,837 $2.27 $116,091 $7.73
Stock-based
compensation (1) (5,963) (0.31) (1,965) (0.45) (3,998) (0.27)
Employee incentive
and retention (22,984) (1.19) (2,843) (0.65) (20,141) (1.34)
Restructuring costs (23,669) (1.22) (4,804) (1.11) (18,865) (1.26)
Doubtful receivable
(write-off)
recovery (3,556) (0.18) 13,166 3.02 (16,722) (1.11)
Shareholder
litigation costs (963) (0.05) - - (963) (0.06)
Adjusted G&A $68,793 $3.55 $13,391 $3.08 $55,402 $3.69
======= ===== ======= ===== ======= =====
(1) Year ended December 31, 2017,
Successor 2016 Period and
Predecessor 2016 Period exclude
$1.8 million, $4.3 million and
$5.1 million, respectively, for
the acceleration of certain
stock awards.
Reconciliation of PV-10 to Standardized Measure
PV-10 is a non-GAAP financial measure and represents the present value of estimated future cash inflows from proved oil, natural gas and NGL reserves, less future development and production costs, discounted at 10% per annum to reflect timing of future cash flows and using 12-month average prices for the year ended December 31, 2017. PV-10 differs from Standardized Measure because it does not include the effects of income taxes on future net revenues. PV-10 is used by the industry and by management as a reserve asset value measure to compare against past reserve bases and the reserve bases of other business entities. It is useful because its calculation is not dependent on the taxpaying status of the entity. Because of the present value of future income tax discounted at 10% is insignificant, these measures are equivalent.
The PV-10 of strip-based proved reserves is a non-GAAP financial measure and differs from standardized measure because it reflects the estimated proved reserves economically recoverable based on forward NYMEX strip prices rather than SEC pricing and does not include the effects of income taxes on future net revenues. PV-10 of strip-based proved reserves is useful to investors to illustrate the potential value of proved reserves that are economically recoverable in the current commodity price environment rather than SEC prices. Neither the PV-10 of the Company's SEC reserves, the PV-10 of strip-based proved reserves nor the Standardized Measure represents an estimate of fair market value of the Company's oil and natural gas properties.
Net Debt
The Company also uses the term net debt to determine the extent to which the Company's outstanding debt obligations would be satisfied by its cash and cash equivalents on hand. Management believes this metric is useful to investors in determining the Company's current leverage position following recent significant events subsequent to the period.
For further information, please contact:
Johna M. Robinson
Investor Relations
SandRidge Energy, Inc.
123 Robert S. Kerr Avenue
Oklahoma City, OK 73102-6406
(405) 429-5515
Cautionary Note to Investors - This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, the information appearing under the heading "2018 Operational and Capital Expenditure Guidance." These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include projections and estimates of the Company's corporate strategies, future operations, and development plans and appraisal programs, projected acreage position, drilling inventory and locations, estimated oil, and natural gas and natural gas liquids production, rates of return, reserves, price realizations and differentials, hedging program, projected operating, general and administrative and other costs, projected capital expenditures, tax rates, efficiency and cost reduction initiative outcomes, liquidity and capital structure and infrastructure assessment and investment. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to natural gas wells, the availability and terms of capital, the ability of counterparties to transactions with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in Part I, Item 1A - "Risk Factors" of our Annual Report on Form 10-K and in comparable "Risk Factor" sections of our Quarterly Reports on Form 10-Q filed after such form 10-K. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our Company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements.
SandRidge Energy, Inc. (NYSE: SD) is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth-oriented projects in the U.S. Mid-Continent and Niobrara Shale.
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SOURCE SandRidge Energy, Inc.
