SandRidge Energy saw a drop in earnings and revenue in the second quarter of the year. The Oklahoma City company reported net income of $16.6 million or 45 cents a basic share, down from the first quarter net income of $23.8 million, or $0.64 per basic share.
Second quarter adjusted net income was $14 million or 38 cents a basic share, also less than first quarter adjusted net income of
$25.7 million, or $0.70 per basic share. The company’s adjusted EBITDA in the second quarter was 20 million compared to $31.2 million in the first quarter.
As of June 30, 2023, the Company had $224.0 million of cash and cash equivalents, including restricted cash, diversified across multiple financial institutions. The Company has no outstanding term or revolving debt obligations.
While SandRidge might not have the drilling power it once did, the Oklahoma City company still had production of 1,593 MBoe during the second quarter and most of it was natural gas. Its production was nearly the same as a year earlier, despite the decline in earnings and revenue. The company credited its recent capital development program with sustaining production levels while increasing oil content as a percentage of the total production.
During the second quarter, SandRidge completed two wells targeting the Meramec formation in the core of the Northwest Stack play as part of its previously announced capital development program, concluding the program for the year. SandRidge will continue to monitor opportunities for future development, with its primary focus being to generate high rates of return.
The higher oil content of its new Northwest Stack wells versus the Company’s base production was the primary driver of SandRidge’s oil production increasing by approximately 39% in the second quarter of 2023 versus the second quarter of 2022. This increases the company’s oil as a percentage of total production and enhances its commodity realizations.
During the first half of 2023, SandRidge completed ten artificial lift conversions as the company continues to focus on high return and value-adding projects that provide benefits such as lowering forward-looking costs, enhancing or reactivating production on existing wells, and further supporting its modest decline profile. These focused efforts over recent quarters have helped lower SandRidge’s expected annual base PDP decline to an average of ~8% over the next ten years. The company said it continues to ensure that all projects meet high rate of return thresholds and remains capital disciplined as the commodity price landscape changes.
What about the third and fourth quarters? SandRidge plans a focus on “growing the cash value and generation capability of its asset base in a safe, responsible and efficient manner.” In other words, it will be picky and careful about choosing where it will put its money on drilling projects, making sure they have high rates of returns in the current commodity price outlook.