SandRidge Energy, Inc. Reports Financial and Operational Results for Third Quarter 2018
OKLAHOMA CITY, Nov. 7, 2018 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company" or "SandRidge") (NYSE:SD) today announced financial and operational results for the quarter ended September 30, 2018. For the third quarter, the Company reported net income of $12 million, or $0.33 per share, and net cash provided by operating activities of $53 million. After adjusting for certain items, the Company's adjusted net income amounted to $11 million, or $0.31 per share, operating cash flow totaled $48 million and adjusted EBITDA was $48 million for the quarter. The Company defines and reconciles such non-GAAP financial measures to the most directly comparable GAAP measure in supporting tables at the conclusion of this press release under the "Non-GAAP Financial Measures" beginning on page 12.
Highlights During and Subsequent to the Third Quarter
-- Net Income of $12 million, or $0.33 per diluted share; Adjusted Net
Income of $11 million, or $0.31 per diluted share
-- Cash flow from operating activities of $53 million, up 21% from 2017
third quarter
-- Total Company production of 34 MBoepd, up 6% compared to 2018 second
quarter; Oil production of 10.4 MBopd, up 27% over same period
-- 6% increase to mid-point of 2018 production guidance
-- EBITDA and Adjusted EBITDA of $48 million
-- Exit from the Central Basin Platform with sale of non-core properties
-- Acquired incremental ownership position in existing Mid-Continent assets
Bill Griffin, President and CEO commented, "The Company's evolution and commitment to change is yielding positive results, as demonstrated with our tangible improvements in third quarter production and earnings, along with positive changes to full year guidance. Additionally, following the culmination of our extended review of strategic alternatives, I am pleased with the organization's ability to put those efforts behind us and shift our full focus on moving forward with execution of development and growth plans. The Company generated $48 million of EBITDA during the quarter, as well as quarter to quarter production growth, driven largely by the results of our drilling program. This accomplishment marks a very positive milestone after an extended period of quarterly production declines. We expect to provide a more detailed picture of longer term earnings growth with the finalization of our 2019 development program and budget.
"The recently announced exit from the Central Basin Platform and the Permian Trust simplifies the Company's core business, improves profitability and significantly reduces our obligations for future abandonment costs. The immediate redeployment of these proceeds into a very complimentary acquisition of low risk Mid-Continent production and reserves at a compelling price further supports our belief that strategic, attractively priced acquisition opportunities exist and should be an important component of additional growth and optionality for SandRidge as we move forward.
"North Park Basin results continue to be very positive and record production rates are driving the meaningful realization of increased oil production and operating income. Growth in the relative contribution of higher margin oil volumes to the Company's total revenue stream remains a key component of our profitability improvement strategy. We continue to advance the learning curve with our Meramec drilling program in the Northwest STACK. Not only have we built confidence in our ability to identify commercially viable areas of future development in the Northwest STACK, we have driven down cycle times and continue to reduce associated development costs.
"SandRidge remains committed to the creation of shareholder value and continuous improvement. We are confident in our ability to deliver profitable growth within our existing asset base. The strategy remains focused on leveraging our strong cash flow and balance sheet to drive development and selectively target appropriately sized acquisitions that fit our core competencies and provide immediate, high-return growth optionality to our inventory."
Operational Results and Activity
During the quarter, production totaled 3.1 MMBoe (30% oil, 23% NGLs and 47% natural gas). The Company averaged two rigs in the Mid-Continent region targeting the Mississippian Lime and the Northwest STACK Meramec. After a pause in North Park Basin drilling earlier this year, drilling resumed during the quarter to bring the Company's total current rig count to three.
North Park Basin Asset in Jackson County, Colorado
Net oil production in the North Park Basin totaled 379 MBo (4.1 MBopd) for the third quarter, a new record for the asset.
During the quarter, the Company continued development activities to advance two separate spacing tests on the eastern and western sides of the field. The eastern area 1,320 foot "wine rack" spacing test, comprised of eight XRLs, produced an average 30-Day IP of 983 Bopd, 129% of type curve. The wells were completed in the B, C and D Niobrara benches utilizing a twelve wells per section pattern.
The second 660 foot "wine rack" spacing test, on the western side of the field, will evaluate the potential for three layers of wells to capture reserves from A, B, C and D benches. Successful results would provide support for a potential of twenty-three wells per section. Early results from the first well were announced last quarter, and the Peters 16-12H13 has since produced a 30-Day IP of 710 Bopd. During the quarter, drilling operations began on five subsequent wells within the pattern with first sales expected during the first quarter of 2019.
Additionally, two XRLs targeting a southern expansion of the core area are projected to spud late in the fourth quarter.
Mid-Continent Assets in Oklahoma and Kansas
In the third quarter, production in the Mississippian Lime totaled 2.4 MMBoe (26 MBoepd, 17% oil) and Northwest STACK production totaled 221 MBoe (2.4 MBoepd, 39% oil).
The Company maintained one rig in the Northwest STACK targeting the Meramec and drilled three wells under the previously announced Drilling Participation Agreement. The Company brought four wells to sales with a combined 30-Day IP averaging 549 Boepd (61% oil).
During the quarter, the Company continued drilling in the Mississippian Lime and recently brought the first of four planned wells online with results expected in the fourth quarter. SandRidge intends to extend this rig through the end of the year to drill three Northwest STACK Meramec wells not under the Drilling Participation agreement. These high interest wells will offset two highly productive wells, the Medill 1-27H which produced a 30-Day IP of 925 Boepd (77% oil), and the Campbell 1-26H23H which delivered a 30-Day IP of 902 Boepd (81% oil).
Colorado Ballot Proposition 112
On November 6, 2018, the citizens of Colorado voted against Proposition 112, a ballot initiative that would have severely restricted energy development in the state. As a result, the Company's current development plans for the North Park Basin remain unchanged. Recently, various initiatives have been promoted by interest groups to increase regulations inhibiting oil and gas development. SandRidge will continue to monitor such initiatives in all of its operational areas. The Company values and respects the environment and remains committed to conducting all operations in a safe and responsible manner.
Capital Expenditures and 2018 Guidance Update
For the three and nine months ended September 30, 2018, capital expenditures were $43 million and $118 million, respectively. For 2018, the Company expects to spend between $180 million and $190 million, which is unchanged from previous guidance. However, the Company's drilling and completion costs were reallocated between North Park and the Mid-Continent due to timing of North Park wells and additional high interest Northwest STACK wells added to the 2018 program.
As a result of higher realized production, the Central Basin Platform divestiture and Mid-Continent acquisition, the Company increased its 2018 production guidance to 12.0 - 12.5 MMBoe from 11.3 - 11.9 MMBoe. Total lease operating expenses will remain unchanged and adjusted G&A decreased by $1 million to a range of $39 - $41 million.
Liquidity and Capital Structure
As a result of the fall redetermination, the Company's borrowing base has been set at $350 million. As of November 2, 2018, following the closing of the previously announced transactions, the Company's liquidity totaled $363.4 million, which includes $19.6 million of cash and $350 million of borrowing capacity under the credit facility, net of outstanding letters of credit. The Company currently has no funds drawn under its credit facility.
Conference Call Information
The Company will host a conference call to discuss these results on Thursday, November 8, 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 8344069. An audio replay of the call will be available from November 8, 2018 until 11:59 pm CT on December 8, 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 8344069.
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.
2018 Operational and Capital Expenditure Guidance
Presented below is the Company's operational and capital expenditure guidance for 2018.
Updated
Previous
Guidance Guidance
Projection as of
Projection as of
November 7, 2018
August 8, 2018
Production
---
Oil (MMBbls)
3.4 - 3.6
3.4 - 3.6
Natural Gas Liquids
(MMBbls)
2.7 - 2.9
2.6 - 2.8
Total Liquids (MMBbls)
6.1 - 6.5
6.0 - 6.4
Natural Gas (Bcf)
35.5 - 35.8
31.5 - 33.0
Total (MMBoe)
12.0 - 12.5
11.3 - 11.9
Price Differential
---
Oil (per Bbl) $2.60 $2.80
Natural Gas Liquids
(realized % of NYMEX
WTI) 37% 36%
Natural Gas (per MMBtu) $1.20 $1.20
Expenses
---
LOE
$92 - $95 million
$92 - $95 million
Adjusted G&A Expense (1)
$39 - $41 million
$40 - $42 million
% of Revenue
---
Production Taxes 5.50% - 5.70% 5.30% - 5.70%
Capital Expenditures ($
in millions)
---
Drilling and Completion
---
Mid-Continent
$22 - $27
$17 - $19
North Park Basin
55 - 60
65 - 73
Other (2) 35 34
Total Drilling and
Completion
$112 - $122
$116 - $126
Other E&P
---
Land, G&G, and Seismic $16 $15
Infrastructure (3) 18 15
Workover 26 25
Capitalized G&A and
Interest 7 8
Total Other Exploration
and Production $67 $63
General Corporate 1 1
Total Capital
Expenditures
$180 - $190
$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 12. 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 Gathering and
Facilities
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,
2018 2017 2018 2017
Production -
Total
Oil (MBbl) 956 954 2,637 3,130
NGL (MBbl) 710 807 2,110 2,601
Natural Gas
(MMcf) 8,757 10,850 27,221 33,883
Oil equivalent
(MBoe) 3,126 3,569 9,284 11,378
Daily production
(MBoed) 34.0 38.8 34.0 41.7
Average price per
unit
Realized oil
price per barrel
-as reported $
66.94 $
46.16 $
63.16 $
47.22
Realized impact
of derivatives
per barrel (12.95) 3.51 (12.35) 2.20
Net realized
price per barrel $
53.99 $
49.67 $
50.81 $
49.42
Realized NGL
price per barrel
-as reported $
26.45 $
19.07 $
24.70 $
16.52
Realized impact
of derivatives
per barrel
Net realized
price per barrel $
26.45 $
19.07 $
24.70 $
16.52
Realized natural
gas price per
Mcf -as
reported $
1.68 $
1.95 $
1.66 $
2.14
Realized impact
of derivatives
per Mcf 0.09 0.15 0.13 0.02
Net realized
price per Mcf $
1.77 $
2.10 $
1.79 $
2.16
Realized price
per Boe -as
reported $
31.19 $
22.57 $
28.41 $
23.14
Net realized
price per Boe -
including impact
of derivatives $
27.47 $
23.97 $
25.28 $
23.81
Average cost per
Boe
Lease operating $
7.49 $
7.50 $
7.42 $
6.77
Production taxes $
1.80 $
1.01 $
1.59 $
0.83
Depletion (1) $
10.59 $
8.69 $
9.91 $
7.69
Earnings per
share
Earnings (loss)
per share
applicable to
common
stockholders
Basic $
0.33 $
(0.25) $
(1.81) $
2.07
Diluted $
0.33 $
(0.25) $
(1.81) $
2.06
Adjusted net
income (loss)
per share
available to
common
stockholders
Basic $
0.31 $
0.35 $
0.42 $
1.28
Diluted $
0.31 $
0.35 $
0.42 $
1.27
Weighted average
number of shares
outstanding (in
thousands)
Basic 35,308 34,290 34,971 31,750
Diluted (2) 35,330 34,388 34,971 31,984
(1) Includes
accretion
of asset
retirement
obligation.
(2) 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 and nine months ended September 30, 2018 at the same level of detail as its full year capital expenditure guidance.
Three Months Ended Nine Months Ended
September 30, 2018 September 30, 2018
(In thousands) (In thousands)
Drilling and Completion
---
Mid-Continent $
7,700 $
11,091
North Park Basin 16,367 36,841
Other (1) 5,244 29,901
Total Drilling and
Completion $
29,311 $
77,833
Other E&P
---
Land, G&G, and Seismic $
4,500 $
9,745
Infrastructure (2) 2,291 7,199
Workovers 5,570 18,316
Capitalized G&A and
Interest 1,264 4,541
Total Other Exploration
and Production $
13,626 $
39,801
General Corporate $
44 $
44
Total Capital
Expenditures $
42,982 $
117,678
(excluding acquisitions
and plugging and
abandonment)
(1) Primarily
2017
Carryover
(2) Production
Gathering
and
Facilities
Derivative Contracts
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. In contemplation of the previously terminated merger with Bonanza Creek, which would have been partially financed with debt, we entered into several oil derivative contracts in November 2017. Future hedging requires Board approval. The table below sets forth the Company's consolidated oil and natural gas price swaps for 2018 and 2019 as of November 7, 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 September 30, 2018 and December 31, 2017 is presented below:
September 30, 2018 December 31, 2017
(In thousands)
Cash, cash equivalents
and restricted cash $
34,474 $
101,308
Credit facility
$
$
Building note 37,502
Total debt 37,502
Stockholders' equity
Common stock 36 36
Warrants 88,517 88,500
Additional paid-in
capital 1,054,155 1,038,324
Accumulated deficit (350,173) (286,920)
Total SandRidge Energy,
Inc. stockholders'
equity 792,535 839,940
Total capitalization $
792,535 $
877,442
SandRidge Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Revenues
Oil, natural gas and NGL $
97,491 $
80,540 $
263,761 $
263,235
Other 169 352 489 858
Total revenues 97,660 80,892 264,250 264,093
Expenses
Production 23,429 26,765 68,927 76,997
Production taxes 5,636 3,606 14,725 9,435
Depreciation and
depletion -oil and
natural gas 33,090 31,029 92,048 87,486
Depreciation and
amortization -other 3,036 3,399 9,229 10,729
Impairment - 498 4,170 3,475
General and
administrative 9,251 20,292 33,616 59,184
Accelerated vesting upon
change in control - 6,545
Proxy contest (459) 7,139
Employee termination
benefits 23 32,653 4,815
Loss (gain) on derivative
contracts 11,329 11,702 59,763 (46,024)
Other operating (income)
expense (105) (132) (1,343) 135
Total expenses 85,230 97,159 327,472 206,232
Income (loss) from
operations 12,430 (16,267) (63,222) 57,861
Other (expense) income
Interest expense, net (627) (872) (2,226) (2,757)
Gain on extinguishment of
debt - 1,151
Other (expense) income,
net (118) 197 972 2,222
Total other expense (745) (675) (103) (535)
Income (loss) before
income taxes 11,685 (16,942) (63,325) 57,326
Income tax benefit (30) (8,457) (72) (8,496)
Net income (loss) $
11,715 $
(8,485) $
(63,253) $
65,822
Earnings (loss) per share
Basic $
0.33 $
(0.25) $
(1.81) $
2.07
Diluted $
0.33 $
(0.25) $
(1.81) $
2.06
Weighted average number of common shares
outstanding
Basic 35,308 34,290 34,971 31,750
Diluted 35,330 34,290 34,971 31,984
===
SandRidge Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
September 30, 2018 December 31, 2017
ASSETS
Current assets
Cash and cash equivalents $
32,562 $
99,143
Restricted cash -other 1,912 2,165
Accounts receivable, net 54,493 71,277
Derivative contracts 73 1,310
Prepaid expenses 2,223 5,248
Other current assets 350 15,954
Total current assets 91,613 195,097
Oil and natural gas properties, using full cost
method of accounting
Proved 1,206,363 1,056,806
Unproved 68,737 100,884
Less: accumulated depreciation,
depletion and impairment (546,769) (460,431)
728,331 697,259
Other property, plant and
equipment, net 211,198 225,981
Other assets 1,181 1,290
Total assets $
1,032,323 $
1,119,627
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
expenses $
112,980 $
139,155
Derivative contracts 36,905 10,627
Asset retirement obligation 40,041 41,017
Other current liabilities 7 8,115
Total current liabilities 189,933 198,914
Long-term debt - 37,502
Derivative contracts 6,791 3,568
Asset retirement obligation 39,227 36,527
Other long-term obligations 3,837 3,176
Total liabilities 239,788 279,687
Stockholders' Equity
Common stock, $0.001 par value;
250,000 shares authorized;
35,691 issued and outstanding
at September 30, 2018 and
35,650 issued and outstanding
at December 31, 2017 36 36
Warrants 88,517 88,500
Additional paid-in capital 1,054,155 1,038,324
Accumulated deficit (350,173) (286,920)
Total stockholders' equity 792,535 839,940
Total liabilities and
stockholders' equity $
1,032,323 $
1,119,627
===
SandRidge Energy, Inc. and Subsidiaries
Condensed Consolidated Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30,
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $
(63,253) $
65,822
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities
Provision for doubtful
accounts (6) 133
Depreciation, depletion, and
amortization 101,277 98,215
Impairment 4,170 3,475
Debt issuance costs
amortization 352 313
Amortization of premiums and
discounts on debt (47) (231)
Gain on extinguishment of
debt (1,151)
Loss (gain) on derivative
contracts 59,763 (46,024)
Cash (paid) received on
settlement of derivative
contracts (29,025) 7,700
Stock-based compensation 22,415 12,616
Other (1,734) 188
Changes in operating assets
and liabilities 16,407 5,699
Net cash provided by
operating activities 109,168 147,906
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for
property, plant and
equipment (146,819) (152,743)
Acquisition of assets - (48,236)
Proceeds from sale of assets 14,497 19,769
Net cash used in investing
activities (132,322) (181,210)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of borrowings (36,304)
Debt issuance costs - (1,488)
Cash paid for tax
withholdings on vested stock
awards (7,376) (3,766)
Net cash used in financing
activities (43,680) (5,254)
NET DECREASE IN CASH, CASH
EQUIVALENTS and RESTRICTED
CASH (66,834) (38,558)
CASH, CASH EQUIVALENTS and
RESTRICTED CASH, beginning
of year 101,308 174,071
CASH, CASH EQUIVALENTS and
RESTRICTED CASH, end of
period $
34,474 $
135,513
Supplemental Disclosure of Cash Flow
Information
Cash received for income
taxes $
4,381
$
Supplemental Disclosure of Noncash
Investing and Financing Activities
Change in accrued capital
expenditures $
29,141 $
(15,241)
Equity issued for debt
$ $
(268,779)
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 Operating Activities to Operating Cash Flow
The Company defines operating cash flow as net cash provided by 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.
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(In thousands)
Net cash provided
by operating
activities $
53,051 $
43,974 $
109,168 $
147,906
Changes in
operating assets
and liabilities (5,061) 2,107 (16,407) (5,699)
Operating cash
flow $
47,990 $
46,081 $
92,761 $
142,207
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
The Company defines EBITDA as net income (loss) before income tax benefit, 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.
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(In thousands)
Net income (loss) $
11,715 $
(8,485) $
(63,253) $
65,822
Adjusted for
Income tax benefit (30) (8,457) (72) (8,496)
Interest expense 702 1,177 2,508 3,509
Depreciation and amortization
-other 3,036 3,399 9,229 10,729
Depreciation and depletion -
oil and natural gas 33,090 31,029 92,048 87,486
EBITDA 48,513 18,663 40,460 159,050
Asset impairment 498 4,170 3,475
Stock-based compensation 506 2,961 9,284 10,789
Loss (gain) on derivative
contracts 11,329 11,702 59,763 (46,024)
Cash (paid) received upon
settlement of derivative
contracts (11,632) 4,994 (29,025) 7,700
Employee termination benefits 23 32,653 4,815
Proxy contest (459) 7,139
Acceleration of performance
units 1,232
Restructuring costs 515 3,739
Drilling participation
agreement transaction costs 2,881 2,881
Gain on extinguishment of
debt (1,151)
Other (245) (477) (2,463) (2,712)
Adjusted EBITDA $
48,035 $
41,737 $
122,062 $
143,713
Reconciliation of Cash Provided by Operating Activities to Adjusted EBITDA
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(In thousands)
Net cash provided
by operating
activities $
53,051 $
43,974 $
109,168 $
147,906
Changes in
operating assets
and liabilities (5,061) 2,107 (16,407) (5,699)
Interest expense 702 1,177 2,508 3,509
Employee
termination
benefits (1) 23 19,522 2,990
Proxy contest (459) 7,139
Acceleration of
performance units 1,232
Restructuring
costs 515 3,739
Drilling
participation
agreement
transaction costs 2,881 2,881
Income tax benefit (30) (8,457) (72) (8,496)
Other (191) (460) (1,028) (3,117)
Adjusted EBITDA $
48,035 $
41,737 $
122,062 $
143,713
(1) Excludes
associated
stock-based
compensation.
Reconciliation of Net Income (Loss) Available to Common Stockholders to Adjusted Net Income Available to Common Stockholders
The Company defines adjusted net income as net 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 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 income is not a measure of financial performance under GAAP and should not be considered a substitute for net income available to common stockholders.
Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
$
$/Diluted Share
$
$/Diluted Share
(In thousands, except per share amounts)
Net income (loss)
available to common
stockholders $
11,715 $
0.33 $
(8,485) $
(0.25)
Asset impairment - 498 0.01
Loss on derivative
contracts 11,329 0.32 11,702 0.34
Cash (paid) received
upon settlement of
derivative contracts (11,632) (0.33) 4,994 0.15
Employee termination
benefits 23
Proxy contest (459) (0.01)
Restructuring costs - 515 0.02
Drilling participation
agreement transaction
costs - 2,881 0.09
Other (172) (215) (0.01)
Adjusted net income
available to common
stockholders $
10,804 $
0.31 $
11,890 $
0.35
Basic Diluted (1) Basic Diluted (1)
Weighted average
number of common
shares outstanding 35,308 35,330 34,290 34,388
Total adjusted net
income per share $
0.31 $
0.31 $
0.35 $
0.35
===
Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
$
$/Diluted Share
$
$/Diluted Share
(In thousands, except per share amounts)
Net (loss) income
available to common
stockholders $
(63,253) $
(1.81) $
65,822 $
2.06
Asset impairment 4,170 0.12 3,475 0.11
Loss (gain) on
derivative contracts 59,763 1.71 (46,024) (1.44)
Cash (paid) received
upon settlement of
derivative contracts (29,025) (0.83) 7,700 0.24
Employee termination
benefits 32,653 0.93 4,815 0.15
Proxy contest 7,139 0.20
Accelerated vesting
upon change in
control 6,545 0.19
Restructuring costs - 3,739 0.12
Drilling participation
agreement transaction
costs - 2,881 0.09
Gain on extinguishment
of debt (1,151) (0.03)
Other (2,077) (0.06) (1,642) (0.06)
Adjusted net income
available to common
stockholders $
14,764 $
0.42 $
40,766 $
1.27
Basic Diluted (1) Basic Diluted (1)
Weighted average
number of common
shares outstanding 34,971 34,971 31,750 31,984
Total adjusted net
income per share $
0.42 $
0.42 $
1.28 $
1.27
===
(1) 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, and to 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.
Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
$
$/Boe
$
$/Boe
---
(In thousands, except per Boe amounts)
General and
administrative $
9,251 $
2.96 $
20,292 $
5.69
Stock-based
compensation (1) (506) (0.16) (2,960) (0.83)
Restructuring costs - (515) (0.14)
Drilling
participation
agreement
transaction costs - (2,881) (0.82)
Adjusted G&A $
8,745 $
2.80 $
13,936 $
3.90
===
Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
$
$/Boe
$
$/Boe
(In thousands, except per Boe amounts)
General and
administrative $
33,616 $
3.62 $
59,184 $
5.20
Stock-based
compensation (1) (3,971) (0.43) (10,789) (0.95)
Restructuring costs - (3,739) (0.33)
Drilling
participation
agreement
transaction costs - (2,881) (0.25)
Adjusted G&A $
29,645 $
3.19 $
41,775 $
3.67
===
(1) Nine-month
period ended
September 30,
2018 excludes
approximately
$18.4 million
for the
acceleration
of certain
stock awards
due to the
reduction in
force in
the
first quarter
of 2018 and
the change in
control event
in the second
quarter of
2018. Nine-
month period
ended
September 30,
2017 excludes
approximately
$1.8 million
for the
acceleration
of certain
stock awards.
For further information, please contact:
Johna 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, drilling inventory and locations, estimated oil, and natural gas and natural gas liquids production, 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 Oklahoma and Colorado.
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SOURCE SandRidge Energy, Inc.
