While the new CEO at struggling SandRidge Energy in Oklahoma City expressed optimism during a conference call about the company’s chances of survival, a filing with the SEC contains some serious reservations.
In a filing with the Securities Exchange Commission, SandRidge stated, “We currently project that we will not have sufficient cash on hand or available liquidity to repay the outstanding credit facility balance at maturity without the company taking specific actions to alleviate this liquidity short-fall.”
Then came the key words about whether SandRidge will survive the COVID-19 pandemic and the existing oil crisis.
“These conditions and events raise substantial doubt about our ability to continue as a going concern,” stated the report.
SandRidge said the failure to close in the second quarter on the $35.5 million sale of its downtown highrise headquarters and the ability to use those proceeds to repay the outstanding borrowings at maturity ” could result in the potential foreclosure on the collateral securing the credit facility.”
It is clear SandRidge is struggling to exist and reported that as of the end of July, the company had $16.3 million in cash and cash equivalents with $59 million outstanding under its credit facility and $4.3 million in outstanding letters of credit.
What will help the company is the planned third-quarter closing of the sale of the headquarters. The company explained the due diligence period for the building sale expired and once the closing is accomplished, SandRidge will use the money to refinance its loans.
SandRidge did all the belt tightening it could do, laying off workers and selling its headquarters, all part of an effort to reduce capital expenditures for 2020 from nearly $26 million to less than $5 million.
SandRidge has struggled so much that it did not drill or complete any wells in the first half of 2020 and does not expect to do any in the remainder of the year. Revenues from its oil, natural gas and NGL sales plunged $59 million or nearly 78% for the second quarter compared to a year ago. For the first half of the year, the revenues declined 62%.
The SEC filing also showed that SandRidge, a company that filed Chapter 11 bankruptcy in 2016 is still dealing with some of the legal issues from the filing. While most claims were eventually discharged in Bankruptcy court, two were not and they continue in court where the company is accused of misrepresentations or omissions concerning the performance of wells in the Mississippian region. As late as April 2020, motions had been filed in the cases.
Click here to view SEC filing by SandRidge Energy.
Source: SEC filing