– SandRidge Energy, Inc. on Wednesday announced financial and operational results for the quarter ended June 30, 2018. For the second quarter, the Company reported a net loss of $34 million, or $0.97 per share, and net cash provided by operating activities of $26 million.
After adjusting for certain items, the Company’s adjusted net loss amounted to $2 million, or $0.05 per share, operating cash flow totaled $24 million and adjusted EBITDA was $34 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.
As of August 2, 2018, the Company’s liquidity totaled $436 million, which includes $17 million of cash and $419 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.
During the quarter, the Company sold the building adjacent to its corporate office building, the Parkside Annex, for $10.75 million.
Highlights During and Subsequent to the Second Quarter
• All five new North Park wells exceed pre-drill production estimates with two achieving oil rates in excess of 1,500 Bopd
• Five new wells online in the NW STACK with a combined 30-Day IP rate averaging 584 Boepd (69% oil)
• Further reduced cash G&A and LOE costs to $30.6 million, down 22% from the second quarter of 2017
• Strategic alternatives process moves to evaluation phase
• New Board of Directors initiates thorough review of Company’s cost structure, asset development plan and potential for monetization of non-core assets.
Bill Griffin, President and CEO commented, “Our second quarter performance further demonstrates the Company’s ability to stay focused on continuous improvement and consistent operational execution through a period of change.”
Mr. Griffin continued, “Our near-term course to strategically deploy capital to create value and provide assurance for a clear, organic growth plan is proving successful. This is best demonstrated by the exciting results associated with our North Park drilling program. We recently brought five new Niobrara wells to sales, each with an initial production rate exceeding our pre-drill projections. In particular, four of these wells were drilled to test a twelve wells per section spacing pattern and the average initial oil production rate per well was 1,327 Bopd, which is 175% above type curve. This outstanding performance provides additional support for testing higher density spacing, which is scheduled to commence in the third quarter of 2018.
We also continue to selectively deploy capital in the Mid-Continent, where we have commenced our previously announced drilling program comprised of four Mississippi Lime wells, which are expected to generate excellent returns, along with continuation of our NW STACK delineation efforts with the financial support provided under our drilling participation agreement.
We have remained judicious in our capital spending as we advance efforts to explore any and all strategic alternatives for SandRidge. The Company has continued to make significant progress to reverse production decline and establish a platform for meaningful value growth and a strong balance sheet. Our strategic process continues as we evaluate initial submittals, some of which require reverse due diligence. The Board and Management continue to work diligently to evaluate each and every proposal, while weighing them against the present and future value of the Company in light of our continued positive drilling results.”
Operational Results and Activity
During the quarter, production totaled 3.0 MMBoe (25% oil, 24% NGLs and 51% natural gas). The Company averaged one rig in the NW STACK targeting the Meramec and seven wells underwent completions in the North Park Basin. Capital expenditures totaled $37 million.
Niobrara Asset in North Park Basin, Jackson County, Colorado
During the first quarter, the Company laid out plans to drill two spacing tests located on the eastern and western sides of the field. The eastern area test utilizes a twelve wells per section spacing pattern. The first two XRLs of the test, the Castle 5-17H20 and Castle 6-17H20, were announced earlier this year with an
average 30-Day IP of 1,109 Boepd (91% oil), 132% of type curve. Four additional XRLs, targeting B, C and D benches, went to sales subsequent to the second quarter with initial oil production rates averaging 1,327 Bopd, 175% of type curve, all with less than thirty days of production. The two remaining wells in the eastern
area spacing test are undergoing completion operations and updated well results will be provided at a later
date.
The western area is testing a twenty-three wells per section pattern. The Company drilled the first well, the Peters 16-12H13, at the beginning of the second quarter and it recently went to sales with early rates of 832 Bopd, 109% of type curve. Given the encouraging initial results, drilling operations on the remaining
wells of the western area spacing test will commence in the third quarter with expected sales during the first quarter of 2019.
Net oil production in the North Park Basin totaled 128 MBo (1.4 MBopd) for the second quarter and gross current production is averaging over 6,000 Bopd, inclusive of recent well utperformance.
Mid-Continent Assets in Oklahoma and Kansas
In the second quarter, production in the Miss Lime totaled 2.5 MMBoe (27 MBoepd, 17% oil) and NW STACK totaled 249 MBoe (2.7 MBoepd, 43% oil). The Company averaged one rig in the NW STACK targeting the Meramec and drilled four wells under the previously announced Drilling Participation Agreement. Two of the wells drilled extend the play into SE Woodward County, further delineating the successful core area. Completion operations for the two step-out wells are underway with first sales expected in the third quarter. Also during the quarter, SandRidge brought six wells online with five having
a combined 30-Day IP averaging 584 Boepd (69% oil). Subsequent to the quarter, the Company spud the first of four planned Mississippian wells with an additional rig.
Other Operational Activities
During the second quarter, Permian Central Basin Platform properties produced 113 MBoe (1.2 MBoepd, 80% oil, 13% NGLs, 7% natural gas).
