One of the companies under new leadership and with a correction in its financial course for 2020 is Oklahoma City’s SandRidge Energy, Inc.
Last month, it announced a series of actions it said were “designed to improve shareholder value.” SandRidge not only re-evaluated a minimal 2020 capex plan to maximize free cash flow, but the company named a new Interim President. John P. Suter,who was the company’s Chief Operating Officer replaced Paul D. McKinney who resigned as President and a member of the board.
Since Suter’s appointment, he and the Board of Directors indicated they would undertake a comprehensive review of the company with a goal of improving operational efficiencies and cost controls.
At the time of the change in leadership, board chairman Jonathan Frates stated, “In light of the current challenging price environment, we are reevaluating our 2020 capital plans with an emphasis on cost control and free cash flow generation. Our goal is to maintain our strong balance sheet and pursue only high return opportunities.”
The challenge for SandRidge leadership, according to some analysts and financial observers is how to handle the company’s legacy assets which are mostly natural gas and NGLs where the strip prices are low. Nearly 70% of SandRidge’s production is natural gas and NGLs.
Some believe a $50 million capex budget for the new year could result in a decline in oil production, especially in its Mississippian Lime assets where production already was on the decline averaging nearly 10% per quarter throughout 2019. With most of its assets in natural gas and NGLs, SandRidge faces tougher challenges in financing exploration in its oily assets.
One thing helping SandRidge is a slight increase in oil prices which are hovering around $60 a barrel for West Texas Intermediate crude.