Oklahoma City’s SandRidge Energy, struggling and resorting to layoffs reports first quarter 2020 losses totaling $13 million or 36-cents a share and confirmed it has sold its downtown headquarters building, providing enough capital to keep bankruptcy wolves at bay. And the new owner is reportedly the State School Land Commission.
SandRidge said after adjusting for certain items, the adjusted net loss amounted to $7 million or 21-cents a share while operating cash flow totaled $17 million and adjusted EBITDA was $20 million for the quarter.
As for the sale of its office building at 123 Robert S. Kerr in the city’s downtown, the sale was completed on Friday for a total of $35.5 million but the buyer was not identified in the quarterly financial report. However, SandRidge said the sale is expected to close in the third quarter of 2020.
Unconfirmed reports late Tuesday indicated the School Land Commission was the buyer and the purchase included four adjacent buildings referred to as SandRidge Commons.
It was ten years ago when SandRidge invested an estimated $100 million in renovations of the buildings.
The sale, according to the report will help SandRidge survive without any mention of bankruptcy.
“Given the anticipated third quarter proceeds from the May 2020 agreement to sell its corporate headquarters for $35.5 million as well as the expected increased cash flow from the recently implemented cost and capex initiatives, together with other levers available to the Company, management believes the Company will have sufficient funds or access to other capital to operate as a going concern in the current challenging commodity price environment,” stated the financial report.
Following layoffs that occurred in the quarter and the impact of the coronavirus pandemic, SandRidge had a large number of empty offices and closed its headquarters as safety precautions.
Despite the losses, the company said it managed to reduce borrowings under the company’s credit facility to $46 million compared to the $57.5 million it borrowed by the end of 2019.
During the quarter, SandRidge lowered its workforce and cut general administrative expenses to a new 2020 guidance of $11 million to $15 million, down from the $29 million spent in 2019.
Layoffs and the stoppage of field operations lowered the company’s new 2020 guidance to about $48 million compared to the $91 million spent in 2019 and from the original first quarter 2020 guidance of nearly $72 million. Planned capital expenditures for 2020 were reduced to $4 to $9 million from the original 2020 guidance of $25 to $30 million provided in February 2020.
Now under the leadership of Carl F. Giesler, Jr. who is the new President and CEO named to the job in April, the company says the reduction in the size of the executive team will occur in July 2020.
“We will only spend capital required for safety or mechanical integrity or for low spend, quick payback cash flow enhancing “small ball” workovers and other projects. We believe our cost savings initiatives coupled with our restricted planned capex should enable us to generate positive operational free cash flow even in this historically challenged commodity price environment,” said Giesler.
As of May 12, 2020, the Company’s total liquidity was $26 million, based on $2 million of cash and $24 million available under its credit facility, net of outstanding letters of credit. The Company currently has $48 million drawn on the facility. Additionally, on that date, the Company’s oil and gas hedges had a mark-to-market value of $5 million.
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Source: SandRidge Energy
