While Carl Icahn, the man known as a “corporate raider” is critical of SandRidge Energy’s recent $746 million purchase of Denver’s Bonanza Creek Energy, SandRidge is responding with its side of the story.
In a letter and “investor deck” to shareholders, SandRidge maintains the purchase is a “strong strategic fit” with “high quality assets” and “financially attractive.”
Icahn has called the deal “insane” and “ridiculous.” But SandRidge maintains the move also reduces its reliance on Mid-Continent drilling in the Mississippian play in Oklahoma and southern Kansas. Further it states that there is “considerable immediate cash flow” as a result of the acquisition which gives SandRidge more reach into the rich oil play of northern Colorado.
In its letter to shareholders, SandRidge said, “”After a detailed and thorough assessment of Bonanza Creek, we determined this acquisition to be in the best long-term interests of our shareholders.”
In the investor deck, SandRidge said cost reductions will improve margins and the production profile will be enhanced.
Compared to other recent transactions by SandRidge, the Bonanza Creek Energy purchase metrics “compare favorably.”
In its recent shareholder letter, SandRidge stated, “A vocal minority of shareholders have attempted to criticize the acquisition by distorting the facts and misleading the investing public. Their assertions are false and reckless.”