SandRidge Energy, Inc. Reports Financial and Operational Results for Fourth Quarter and Full Year 2011
Increases Oil Production by 60% and Total Production by 16% from 2010
Increases Consolidated Proved PV-10 by 52% from Year End 2010 with Reserve Replacement of 303%
Announces Acquisition of Dynamic Offshore Resources, LLC for $1.275 Billion
OKLAHOMA CITY, Feb. 23, 2012 /PRNewswire/ -- SandRidge Energy, Inc.
today announced financial and operational results for the quarter and year ended December 31, 2011.Key Financial Results
Fourth Quarter
-- Adjusted EBITDA of $175 million for fourth quarter 2011 compared to $130
million in fourth quarter 2010.
-- Operating cash flow of $153 million for fourth quarter 2011 compared to
$72 million in fourth quarter 2010.
-- Net loss applicable to common stockholders of $389 million, or $0.97 per
diluted share, for fourth quarter 2011 compared to net loss applicable
to common stockholders of $208 million, or $0.53 per diluted share, in
fourth quarter 2010.
-- Adjusted net income of $9.1 million, or $0.02 per diluted share, for
fourth quarter 2011 compared to adjusted net loss of $35.4 million, or
$0.07 per diluted share, in fourth quarter 2010.
Full Year
-- Adjusted EBITDA of $654 million ($699 million including realized cash
gains on out-of-period derivative contract settlements) for 2011
compared to $645 million ($668 million including realized cash gains on
out-of-period derivative contract settlements) in 2010.
-- Operating cash flow of $535 million for 2011 compared to $410 million in
2010.
-- Net income available to common stockholders of $52 million, or $0.13 per
diluted share, for 2011 compared to net income available to common
stockholders of $153 million, or $0.52 per diluted share, in 2010.
-- Adjusted net income of $7.1 million, or $0.01 per diluted share,
(adjusted net income of $52.6 million, or $0.11 per diluted share,
including realized cash gains on out-of-period derivative contract
settlements) for 2011 compared to adjusted net income of $42.4 million,
or $0.11 per diluted share, (adjusted net income of $65.7 million, or
$0.17 per diluted share, including realized cash gains on out-of-period
derivative contract settlements) in 2010.
Adjusted net income available (loss applicable) to common stockholders, adjusted EBITDA and operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under 'Non-GAAP Financial Measures' beginning on page 11.
Highlights
-- Cash proceeds of over $2 billion received since January 1, 2011 through
royalty trust offerings, joint ventures and asset sales.
-- Secured $1 billion in drilling carries through two Mississippian joint
ventures.
-- Entered into agreement to acquire Dynamic Offshore Resources, LLC for
aggregate consideration of $1.275 billion, consisting of approximately
$680 million in cash and approximately 74 million shares of SandRidge
common stock. Closing expected during second quarter of 2012.
-- Record oil production in fourth quarter and full year 2011 of 3.29
MMBbls and 11.83 MMBbls, respectively.
-- Consolidated oil reserves of 245 MMBbls at year end 2011.
-- Consolidated proved reserves of 471 MMBoe at year end 2011.
-- Consolidated SEC PV-10 value of $6.9 billion at year end 2011.
-- Reserve replacement of 303%.
-- Current daily production of 67 MBoe per day.
Drilling Activities
SandRidge averaged 35 rigs operating during the fourth quarter of 2011 and drilled 254 wells. The company drilled a total of 970 wells during 2011. A total of 254 gross (233 net) operated wells were completed and brought on production during the fourth quarter of 2011, bringing the total number of operated wells completed and brought on production during 2011 to 943 gross (892 net). Currently, the company has 37 rigs operating (including 3 drilling saltwater disposal wells), of which 19 are SandRidge-owned Lariat rigs.
Mississippian Play. During the fourth quarter of 2011, SandRidge drilled 59 horizontal wells in the Mississippian play in northern Oklahoma and Kansas bringing the total number of operated wells drilled during 2011 in the Mississippian to 167. Industry-wide, over 480 horizontal wells have been drilled to date in the 17 million acre Mississippian play, including 232 drilled by SandRidge. SandRidge has identified over 9,000 (7,000 net) drilling locations on over 2 million (1.5 million net) acres. The company presently has 24 rigs operating in the play, of which 21 are drilling horizontal producer wells with 3 drilling saltwater disposal wells, and plans to operate an average of 26 rigs in the Mississippian during 2012. SandRidge plans to drill approximately 380 horizontal wells in the Mississippian play in 2012.
Permian Basin. The company drilled 195 wells in the Permian Basin during the fourth quarter of 2011 and 803 wells during 2011 and has identified approximately 7,900 additional drilling locations on its 225,000 net acres. SandRidge presently operates 13 rigs in the Permian Basin, all of which are operating on the Central Basin Platform drilling primarily Grayburg/San Andres vertical wells at depths ranging from 4,500 feet to 7,500 feet. The company plans to drill over 750 wells in the Permian Basin in 2012.
Proved Reserves
The company's estimated consolidated proved reserves as of December 31, 2011 were 471 MMBoe, representing an 18% increase (after adjustments for asset sales and production) from December 31, 2010. During 2011, the company recognized additional consolidated proved reserves of 101 MMBoe primarily as a result of successful drilling in the Mississippian Play and the Central Basin Platform. This increase was partially offset by 30 MMBoe of downward revisions to natural gas properties, primarily in the Pinon Field. Proved developed reserves constituted 49% of total consolidated reserves as of December 31, 2011. Third party engineers evaluated a combined 98% of the total consolidated proved PV-10 value as of December 31, 2011.
The December 31, 2011 estimated future net cash flows from consolidated proved reserves, discounted at an annual rate of 10%, before income taxes ('PV-10') were $6.9 billion, an increase of 52% from December 31, 2010 and an increase of 122% after adjustments for asset sales and production. The weighted average wellhead prices, which are based on index prices and adjusted for transportation and regional price differentials, used to estimate the company's consolidated proved reserves and future net revenues were $85.77 per barrel for oil and $4.06 per Mcf for natural gas at December 31, 2011 compared to $66.93 per barrel for oil and $3.80 per Mcf for natural gas at December 31, 2010.
Proved developed drilling finding costs and proved developed all-in finding costs, which include drilling, land and seismic costs, were $19.66 and $24.61 per Boe, respectively, for the year ended December 31, 2011.
Analysis of Changes in Consolidated Proved Reserves
Liquids Natural Gas Combined
(MBbls) (MMcf) (MBoe)
------- ------ ------
As of December
31, 2010 252,114 1,762,665 545,892
Sales of
reserves (43,331) (476,212) (122,699)
------- -------- --------
Pro forma as of
December 31,
2010 208,783 1,286,453 423,193
Acquisition of
reserves 1,533 2,906 2,018
Production (11,830) (69,306) (23,381)
Extensions and
discoveries 55,577 299,848 105,551
Revisions of
previous
estimates (9,278) (164,845) (36,751)
------ -------- -------
As of December
31, 2011(1) 244,785 1,355,056 470,630
======= ========= =======
2011 2010
---- ----
PV-10 (in Millions)
Oil properties $6,589 $3,961
Gas properties 287 548
--- ---
Total(2) $6,876 $4,509
====== ======
% Oil Properties
to Total 96% 88%
PV-10 of proved
Reserves
($/Boe) $14.61 $8.26
(1) Includes approximately 26,350 MBoe attributable to
noncontrolling interests.
(2) December 31, 2011 includes PV-10 attributable to
noncontrolling interests of approximately $935 million.
Operational and Financial Statistics
Information regarding the company's production, pricing, costs and earnings is presented below:
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
Production
Oil
(MBbl)(1) 3,290 2,612 11,830 7,386
Natural
gas
(MMcf) 16,866 18,753 69,306 76,226
Oil equivalent
(MBoe) 6,101 5,738 23,381 20,090
Daily
production
(MBoed)(2) 66.3 62.4 64.1 55.0
Average price
per unit
Realized oil price per
barrel -as reported(1) $84.74 $71.84 $83.21 $66.89
Realized impact of
derivatives per barrel(1) (5.46) (3.69) (6.80) 1.26
----- ----- ----- ----
Net realized
price per
barrel(1) $79.28 $68.15 $76.41 $68.15
====== ====== ====== ======
Realized natural gas price
per Mcf -as reported $2.99 $3.07 $3.50 $3.68
Realized impact of
derivatives per Mcf 0.12 (0.43) (0.23) 2.52
---- ----- ----- ----
Net realized
price per Mcf $3.11 $2.64 $3.27 $6.20
===== ===== ===== =====
Realized price per Boe -as
reported $53.97 $42.73 $52.47 $38.56
====== ====== ====== ======
Net realized price per Boe -
including impact of derivatives $51.35 $39.64 $48.35 $48.58
====== ====== ====== ======
Average cost
per Boe
Lease
operating $13.20 $11.42 $13.81 $11.84
Production
taxes 2.04 1.75 1.97 1.45
General and
administrative
General and administrative,
excluding stock-based compensation 4.93 6.73 4.70 7.06
Stock-based compensation 1.68 2.35 1.65 1.88
Depletion 14.72 13.51 13.97 13.70
Lease operating cost per Boe
Excluding offshore and
tertiary recovery $12.46 $10.70 $12.86 $10.77
Offshore
operations 33.87 25.52 38.29 25.74
Tertiary
recovery
operations 33.71 34.50 39.04 53.17
Earnings per
share
(Loss) income per share
(applicable) available to common
stockholders
Basic $(0.97) $(0.53) $0.13 $0.52
Diluted (0.97) (0.53) 0.13 0.52
Adjusted net (loss) income per share
(applicable) available to common
stockholders
Basic $(0.01) $(0.12) $(0.12) $0.02
Diluted 0.02 (0.07) 0.01 0.11
Weighted average number of common
shares outstanding (in
thousands)
Basic 399,430 395,255 398,851 291,869
Diluted(3) 497,833 491,329 496,779 387,059
(1) Includes NGLs.
(2) 2011 production includes impact from 2011 Wolfberry, New Mexico and East Texas asset sales with combined
production of approximately 7,200 Boe per day at the time of their respective sales.
(3) Includes shares considered antidilutive for calculating earnings per share in accordance with GAAP for
certain periods presented.
Discussion of 2011 Financial Results
Fourth Quarter
Oil and natural gas revenue increased 34% to $329.3 million in fourth quarter 2011 from $245.2 million in the same period of 2010 as a result of increases in oil production and realized reported oil prices. Oil production increased 26% to 3.3 MMBbls from fourth quarter 2010 production of 2.6 MMBbls mainly due to continued development of the company's oil properties in the Mississippian play and Permian Basin. Fourth quarter 2011 total production increased 6% to 6.1 MMBoe from 5.7 MMBoe in fourth quarter 2010. Realized reported prices, which exclude the impact of derivative settlements, were $84.74 per barrel and $2.99 per Mcf during fourth quarter 2011. Realized reported prices in the same period of 2010 were $71.84 per barrel and $3.07 per Mcf.
Production expense increased 23% to $80.5 million in fourth quarter 2011 from $65.5 million in the same period of 2010 due primarily to the addition of costs from newly completed oil wells brought on production during 2010 and 2011 with the growth of the company's Permian Basin and Mississippian plays. The company brought 254 wells on production during fourth quarter 2011. Fourth quarter 2011 production expense was $13.20 per Boe compared to fourth quarter 2010 production expense of $11.42 per Boe.
Depletion per unit in fourth quarter 2011 was $14.72 per Boe compared to $13.51 per Boe in the same period of 2010. The increase in rate per unit primarily was a result of 2011 non-core asset sales.
Full Year
Oil and natural gas revenues increased 58% to $1,226.8 million in 2011 from $774.8 million in 2010 as a result of increases in oil production and realized reported prices. Oil production increased 60% to 11.8 MMBbls from 2010 production of 7.4 MMBbls mainly due to oil production added as a result of the company's drilling programs in the Mississippian play and Permian Basin. Total 2011 production increased 16% to 23.4 MMBoe from 2010 production of 20.1 MMBoe. Realized reported prices were $83.21 per barrel and $3.50 per Mcf during 2011 compared to $66.89 per barrel and $3.68 per Mcf in 2010.
Production expense increased 36% to $322.9 million in 2011 from $237.9 million in 2010 due primarily to newly completed wells brought on production during 2011 with the growth of the company's Permian Basin and Mississippian plays. The company completed and brought 943 wells on production during 2011. Production expense was $13.81 per Boe in 2011 compared to $11.84 per Boe in 2010.
Depletion per unit in 2011 was $13.97 per Boe compared to $13.70 per Boe in 2010 due to non-core asset sales during 2011.
Capital Expenditures
The table below summarizes the company's capital expenditures for the quarters and years ended December 31, 2011 and 2010:
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(in thousands)
Drilling and
production
Permian
Basin $183,627 $166,044 $700,577 $446,230
Mid-
Continent 173,435 63,533 621,089 146,455
WTO 11,102 41,125 30,155 299,910
Tertiary 4,940 10,024 23,041 23,030
Other 2,143 2,252 7,365 31,167
----- ----- ----- ------
375,247 282,978 1,382,227 946,792
Leasehold and
seismic
Permian
Basin 2,891 5,540 31,977 27,582
Mid-
Continent 74,349 37,798 307,169 63,641
WTO 48 323 2,987 7,239
Tertiary 4 - 238 88
Other 1,159 1,198 5,597 4,515
----- ----- ----- -----
78,451 44,859 347,968 103,065
Pipe
inventory(1) 1,031 (6,089) (16,329) (22,962)
Total exploration and
development(2) 454,729 321,748 1,713,866 1,026,895
------- ------- --------- ---------
Drilling and oil
field services 4,983 5,149 25,674 31,658
Midstream 23,123 1,499 38,514 48,401
Other -
general 16,800 5,664 54,971 22,699
------ ----- ------ ------
Total capital
expenditures, excluding
acquisitions 499,635 334,060 1,833,025 1,129,653
------- ------- --------- ---------
Acquisitions(3) 11,877 - 34,628 138,428
------ --- ------ -------
Total capital
expenditures $511,512 $334,060 $1,867,653 $1,268,081
======== ======== ========== ==========
(1) Pipe inventory expenditures for the three-month period ended December 31, 2010 and years
ended December 31, 2011 and 2010 represent transfers
of pipe inventory to the full cost pool for use in drilling and production activities.
(2) Exploration and development expenditures for the years ended December 31, 2011 and 2010
exclude $25.0 million and $105.0 million, respectively,
of additional estimated loss on Century Plant construction contract.
(3) 2010 acquisition expenditures exclude common stock valued at approximately $1.25 billion
issued in connection with and tax liability adjustments
resulting from the Arena acquisition.
Derivative Contracts
The tables below set forth the company's consolidated oil swaps and natural gas price and basis swaps for the years 2012 through 2015 as of February 21, 2012 and include contracts to which SandRidge Mississippian Trust I and SandRidge Permian Trust are parties.
Quarter Ending
--------------
3/31/2012 6/30/2012 9/30/2012 12/31/2012
--------- --------- --------- ----------
Oil Swaps
Volume (MMBbls) 3.04 3.41 3.69 3.81
Swap $99.21 $99.73 $100.02 $100.19
Natural Gas Swaps
Volume (Bcf) 1.82 1.82 - -
Swap $4.90 $4.90 - -
Collar Volume (Bcf) - - 0.20 0.20
Collar: High - - $6.20 $6.20
Collar: Low - - $4.00 $4.00
Year Ending
-----------
12/31/2012 12/31/2013 12/31/2014 12/31/2015
---------- ---------- ---------- ----------
Oil Swaps
Volume (MMBbls) 13.95 12.88 12.83 7.64
Swap $99.82 $93.51 $89.16 $84.77
Natural Gas Swaps
Volume (Bcf) 3.64 - - -
Swap $4.90 - - -
Collar Volume (Bcf) 0.40 0.86 0.94 1.01
Collar: High $6.20 $7.15 $7.78 $8.55
Collar: Low $4.00 $4.00 $4.00 $4.00
Natural Gas Basis
Swaps
Volume (Bcf) - 14.60 - -
Swap - $0.46 - -
Balance Sheet
The company's capital structure at December 31, 2011 and 2010 is presented below:
December 31, December 31,
2011 2010
---- ----
(in thousands)
Cash and cash
equivalents $207,681 $5,863
======== ======
Current maturities of long-term
debt $1,051 $7,293
Long-term debt (net of current
maturities)
Senior credit
facility - 340,000
Mortgage 14,978 16,029
Senior
Notes
Senior Floating Rate Notes due
2014 350,000 350,000
8.625% Senior Notes due 2015 - 650,000
9.875% Senior Notes due 2016, net 354,579 352,707
8.0% Senior Notes due 2018 750,000 750,000
8.75% Senior Notes due 2020, net 443,568 443,057
7.5% Senior Notes due 2021 900,000 -
------- ---
Total debt 2,814,176 2,909,086
Stockholders'
equity
Preferred stock 8 8
Common stock 399 398
Additional paid-
in capital 4,568,856 4,528,912
Treasury stock, at
cost (6,158) (3,547)
Accumulated
deficit (2,937,094) (2,989,576)
---------- ----------
Total SandRidge Energy, Inc.
stockholders' equity 1,626,011 1,536,195
--------- ---------
Noncontrolling
interest 922,939 11,288
Total
capitalization $5,363,126 $4,456,569
========== ==========
During 2011, the company's debt, net of cash balances, decreased by approximately $297 million as a result of capital raising efforts during 2011. On February 21, 2012, the company had no amount drawn under its $790 million senior credit facility and approximately $205 million of cash, leaving approximately $967 million of available liquidity (including the impact of outstanding letters of credit). The company was in compliance with all of the applicable financial and other covenants contained in its debt agreements during the year ended December 31, 2011 and through and as of the date of this release.
Operational Guidance
Year Ending
December 31, 2012
-----------------
Projection as of
February 23, 2012
Production
Oil (MMBbls)(1) 18.2
Natural Gas (Bcf) 84.8
----
Total (MMBoe) 32.3
Differentials
Oil(1) $9.00
Natural Gas 0.50
Costs per Boe
Lifting $16.10 - $17.80
Production Taxes 1.75 - 1.95
DD&A - oil & gas 15.90 - 17.65
DD&A - other 1.75 - 1.95
-----------
Total DD&A $17.65 - $19.60
G&A - cash 4.30 - 4.75
G&A - stock 1.15 - 1.30
-----------
Total G&A $5.45 - $6.05
Interest Expense $8.70 - $9.60
EBITDA from Oilfield Services, Midstream and
Other ($ in millions)(2) $43.5
Adjusted Net Income Attributable to
Noncontrolling Interest ($ in millions)(3) $113.8
P&A Cash Cost ($ in millions) $35.2
Corporate Tax Rate 0%
Deferral Rate 0%
Shares Outstanding at End of Period (in
millions)
Common Stock 493.0
Preferred Stock (as converted) 90.1
----
Fully Diluted 583.1
Capital Expenditures ($ in millions)
Exploration and Production $1,550
Land and Seismic 145
---
Total Exploration and Production $1,695
Oil Field Services 20
Midstream and Other 135
---
Total Capital Expenditures $1,850
(1) Includes NGLs.
EBITDA from Oilfield Services, Midstream and Other is a non-GAAP
financial measure as it excludes from net income interest expense,
income tax expense and depreciation and amortization. The most
directly comparable GAAP measure for EBITDA from Oilfield Services,
Midstream and Other is Net Income from Oilfield Services, Midstream
and Other. Information to reconcile this non-GAAP financial measure
to the most directly comparable GAAP financial measure is not
available at this time, as management is unable to forecast the
excluded items for future periods and/or does not forecast the
(2) excluded items on a segment basis.
Adjusted Net Income Attributable to Noncontrolling Interest is a non-
GAAP financial measure as it excludes unrealized gain or loss on
derivative contracts and gain or loss on sale of assets. The most
directly comparable GAAP measure for Adjusted Net Income Attributable
to Noncontrolling Interest is Net Income Attributable to
Noncontrolling Interest. Information to reconcile this non-GAAP
financial measure to the most directly comparable GAAP financial
measure is not available at this time, as management is unable to
(3) forecast the excluded items for future periods.
The company is providing new guidance for 2012, which includes the following anticipated effects of acquiring Dynamic Offshore Resources, LLC ('Dynamic') (assuming the acquisition closes on April 30, 2012):
-- Increased Production by approximately 5.8 MMBoe, which is risk-adjusted
for potential shut-ins during hurricane season;
-- Decreased Oil and Natural Gas Differentials as production from the
Dynamic properties is expected to realize higher prices;
-- Increased per unit Lifting Cost due to higher costs associated with the
operation of offshore properties, including insurance expenses;
-- Decreased per unit Production Taxes as there is a lower overall
production tax burden associated with the Dynamic properties;
-- Increased per unit DD&A - oil and gas due to a higher depletion rate
associated with the Dynamic properties;
-- Decreased per unit DD&A - other, G&A - cash, G&A - stock and Interest
Expense due to increased production;
-- Increased EBITDA from Oilfield Services, Midstream and Other for
revenues from production handling agreements associated with the Dynamic
properties;
-- Increased Common Stock Shares Outstanding at end of period due to
anticipated issuance of shares in conjunction with the Dynamic
acquisition;
-- Increased Exploration and Production Capital Expenditures by $200
million for anticipated capital expenditures associated with the Dynamic
properties.
Additionally, projected Land and Seismic Expenditures have increased to $145 million from $95 million as a result of planned infill leasing around the company's existing Mississippian acreage.
Non-GAAP Financial Measures
Operating cash flow, adjusted EBITDA, adjusted net (loss applicable) income available to common stockholders and PV-10 are non-GAAP financial measures.
The company defines operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities. It defines EBITDA as net income before income tax expense (benefit), interest expense and depreciation, depletion and amortization. Adjusted EBITDA, as presented herein, is EBITDA excluding interest income, realized gains on out-of-period derivative contract settlements, non-cash realized losses on financing derivatives, (gain) loss on sale of assets, transaction costs, loss on extinguishment of debt, settlement for prior claims and other various non-cash items (including non-cash portion of noncontrolling interest, stock-based compensation, unrealized losses (gains) on derivative contracts, asset impairment, provision for doubtful accounts and inventory obsolescence).
Operating cash flow and adjusted EBITDA are supplemental financial measures used by the company's management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the company's ability to internally fund exploration and development activities and to service or incur additional debt. The company also uses these measures because operating cash flow and adjusted EBITDA relate to the timing of cash receipts and disbursements that the company may not control and may not relate to the period in which the operating activities occurred. Further, operating cash flow and adjusted EBITDA allow the company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. These measures should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles ('GAAP'). Adjusted EBITDA should not be considered as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Therefore, the company's adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
Management also uses the supplemental financial measure of adjusted net (loss applicable) income available to common stockholders, which excludes unrealized losses (gains) on derivative contracts, realized gains on out-of-period derivative contract settlements, non-cash realized losses on financing derivatives, transaction costs, loss on extinguishment of debt, settlement for prior claims and (gain) loss on sale of assets from (loss applicable) income available to common stockholders. Management uses this financial measure as an indicator of the company's operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net (loss applicable) income available to common stockholders is not a measure of financial performance under GAAP and should not be considered a substitute for (loss applicable) income available to common stockholders.
PV-10 represents the present value of estimated future cash inflows from proved oil and natural gas reserves, less future development and production costs, discounted at 10% per annum to reflect timing of future cash flows and using 12-month average prices. PV-10 differs from Standardized Measure because it does not include the effects of income taxes on future net revenues. Management uses PV-10 as an arbitrary reserve asset value measure to compare against past reserve bases and the reserve bases of other business entities that are not dependent on the tax-paying status of the entity.
The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net (loss applicable) income available to common stockholders and PV-10.
Reconciliation of Net Cash Provided by Operating Activities to Operating Cash Flow
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(in thousands)
Net cash provided by
operating
activities $142,659 $50,915 $475,485 $390,128
Add
Changes in operating
assets and
liabilities 10,145 21,367 59,796 20,030
------ ------ ------ ------
Operating cash flow $152,804 $72,282 $535,281 $410,158
======== ======= ======== ========
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(in thousands)
Net (loss) income attributable to
SandRidge Energy, Inc. $(374,716) $(196,475) $108,065 $190,565
Adjusted for
Income tax expense (benefit) 196 10,406 (5,817) (446,680)
Interest expense(1) 60,274 60,856 243,818 239,343
Depreciation and amortization - other 13,712 14,212 53,630 50,776
Depreciation and depletion -oil and
natural gas 89,816 77,501 326,614 275,335
------ ------ ------- -------
EBITDA (210,718) (33,500) 726,310 309,339
Asset impairment 2,825 - 2,825 -
Provision for doubtful accounts 889 27 2,511 129
Inventory obsolescence (105) (200) 40 -
Interest income (146) (60) (240) (296)
Stock-based compensation 9,528 13,507 36,017 37,681
Unrealized losses (gains) on derivative
contracts 426,132 148,240 (101,034) 283,604
Realized gains on out-of-period
derivative
contract settlements - (3,847) (45,627) (23,202)
Non-cash realized losses on financing
derivatives 1,721 - 6,591 -
Other non-cash expense (2,672) (243) (2,012) (371)
(Gain) loss on sale of assets (896) 2,385 (2,044) 2,424
Transaction costs 823 1,941 5,354 17,375
Loss on extinguishment of debt - - 38,232 -
Settlement for prior claims - 2,200 - 18,200
Non-cash portion of noncontrolling
interest(2) (52,179) - (13,059) -
------- --- ------- ---
Adjusted EBITDA $175,202 $130,450 $653,864 $644,883
======== ======== ======== ========
Excludes unrealized (gain) loss on interest rate swaps of ($2.9) million and ($3.1) million for the
three-month periods ended December 31, 2011 and 2010, respectively, and ($6.2) million and $8.4
(1) million for the years ended December 31, 2011 and 2010, respectively.
Represents depreciation and depletion of ($7.4) million and ($15.9) million for the three-month
period ended and year ended December 31, 2011, respectively, and unrealized (losses) gains on
commodity derivative contracts of ($44.8) million and $2.8 million for the three-month period and
(2) year ended December 31, 2011, respectively, attributable to noncontrolling interests.
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(in thousands)
Net cash provided by
operating activities $142,659 $50,915 $475,485 $390,128
Changes in operating assets
and liabilities 10,145 21,367 59,796 20,030
Interest expense(1) 60,274 60,856 243,818 239,343
Realized gains on out-of-
period derivative
contract settlements - (3,847) (45,627) (23,202)
Transaction costs 823 1,941 5,354 17,375
Settlement for prior claims - 2,200 - 18,200
Noncontrolling interest -
SDT(2) (14,793) - (41,165) -
Noncontrolling interest -
PER(2) (17,728) - (26,078) -
Noncontrolling interest -
Other(2) 69 (898) (250) (4,445)
Other non-cash items (6,247) (2,084) (17,469) (12,546)
------ ------ ------- -------
Adjusted EBITDA $175,202 $130,450 $653,864 $644,883
======== ======== ======== ========
Excludes unrealized (gain) loss on interest rate swaps of ($2.9) million and ($3.1) million for
the three-month periods ended December 31, 2011 and 2010, respectively, and ($6.2) million
(1) and $8.4 million for the years ended December 31, 2011 and 2010, respectively.
Excludes depreciation and depletion of ($7.4) million and ($15.9) million for the three-month
period ended and year ended December 31, 2011, respectively, and unrealized (losses) gains on
commodity derivative contracts of ($44.8) million and $2.8 million for the three-month period
(2) and year ended December 31, 2011, respectively, attributable to noncontrolling interests.
Reconciliation of (Loss Applicable) Income Available to Common Stockholders to Adjusted Net (Loss
Applicable) Income Available to Common Stockholders
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(in thousands, except per share data)
(Loss applicable) income available to
common stockholders $(388,597) $(208,023) $52,482 $153,123
Tax (benefit) expense resulting from
Arena acquisition (2,152) 8,937 (8,399) (447,500)
Asset impairment 2,825 - 2,825 -
Unrealized losses (gains) on
derivative contracts(1) 381,328 148,240 (98,178) 283,604
Realized gains on out-of-period
derivative
contract settlements - (3,847) (45,627) (23,202)
Non-cash realized losses on financing
derivatives 1,721 - 6,591 -
(Gain) loss on sale of
assets (896) 2,385 (2,044) 2,424
Transaction costs 823 1,941 5,354 17,375
Loss on extinguishment of
debt - - 38,232 -
Settlement for prior claims - 2,200 - 18,200
Effect of income taxes 202 1,191 255 955
--- ----- --- ---
Adjusted net (loss applicable) income
available to common
stockholders (4,746) (46,976) (48,509) 4,979
Preferred stock dividends 13,881 11,548 55,583 37,442
------ ------ ------ ------
Total adjusted net income
(loss) $9,135 $(35,428) $7,074 $42,421
====== ======== ====== =======
Weighted average number of common
shares outstanding
Basic 399,430 395,255 398,851 291,869
Diluted(2) 497,833 491,329 496,779 387,059
Total adjusted net (loss)
income
Per share -
basic $(0.01) $(0.12) $(0.12) $0.02
Per share -
diluted $0.02 $(0.07) $0.01 $0.11
Excludes unrealized (losses) gains on commodity derivative contracts of ($44.8) million and $2.8
million forthe three-month period and year ended December 31, 2011, respectively, attributable to
(1) noncontrolling interests.
Weighted average fully diluted common shares outstanding for certain periods presented includes shares
(2) thatare considered antidilutive for calculating earnings per share in accordance with GAAP.
Reconciliation of Standardized Measure of Discounted Net Cash Flows to
PV-10
December 31,
------------
2011 2010
---- ----
(in millions)
Standardized measure of
discounted net cash flows(1) $5,216 $3,683
Present value of future net income tax
expense discounted at 10% 1,660 826
----- ---
PV-
10(2) $6,876 $4,509
====== ======
(1) Includes approximately $933 million attributable to noncontrolling
interests at December 31, 2011.
(2) Includes approximately $935 million attributable to noncontrolling
interests at December 31, 2011.
Conference Call Information
The company will host a conference call to discuss these results on Friday, February 24, 2012 at 8:00 am CST. The telephone number to access the conference call from within the U.S. is 866-700-6979 and from outside the U.S. is 617-213-8836. The passcode for the call is 14163110. An audio replay of the call will be available from February 24, 2012 until 11:59 pm CST on March 23, 2012. The number to access the conference call replay from within the U.S. is 888-286-8010 and from outside the U.S. is 617-801-6888. The passcode for the replay is 58664616.
A live audio webcast of the conference call also will be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Events. The webcast will be archived for replay on the company's website for 30 days.
5th Annual Investor/Analyst Meeting
February 28, 2012 (Tuesday) - New York, NY at the Grand Hyatt New York, 109 East 42nd Street at 8:00 am EST.
Conference Participation
SandRidge Energy, Inc. will participate in the following upcoming events:
-- March 26-27, 2012 - Barclays 2012 High Yield Bond & Syndicated Loan
Conference; Phoenix, AZ
-- March 26, 2012 - Howard Weil 40th Annual Energy Conference; New Orleans,
LA
-- April 16-18, 2012 - IPAA 2012 OGIS; New York, NY
At 8:00 am Central Time on the day of each presentation, the corresponding slides and any webcast information will be accessible on the Investor Relations portion of the company's website at www.sandridgeenergy.com. Please check the website for updates regularly as this schedule is subject to change. Also, please note that SandRidge Energy, Inc. intends for its website to be used as a reliable source of information for all future events in which it may participate as well as updated presentations regarding the company. Slides and webcasts (where applicable) will be archived and available for at least 30 days after each use or presentation.
First Quarter 2012 Earnings Release and Conference Call
May 3, 2012 (Thursday) - Earnings press release after market close
May 4, 2012 (Friday) - Earnings conference call at 8:00 am CDT
SandRidge Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
December 31, Year Ended December 31,
------------ -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(Unaudited)
Revenues
Oil and natural gas $329,288 $245,185 $1,226,794 $774,763
Drilling and services 28,180 13,630 103,298 28,543
Midstream and marketing 13,027 26,250 66,690 100,118
Other 3,343 8,004 18,431 28,312
----- ----- ------ ------
Total revenues 373,838 293,069 1,415,213 931,736
Expenses
Production 80,506 65,496 322,877 237,863
Production taxes 12,459 10,024 46,069 29,170
Drilling and services 16,346 9,948 65,654 22,368
Midstream and marketing 13,227 24,085 66,007 90,149
Depreciation and depletion -oil and
natural gas 89,816 77,501 326,614 275,335
Depreciation and amortization -other 13,712 14,212 53,630 50,776
Impairment 2,825 - 2,825 -
General and administrative 40,279 52,146 148,643 179,565
Loss (gain) on derivative contracts 445,021 165,250 (44,075) 50,872
(Gain) loss on sale of assets (896) 2,385 (2,044) 2,424
---- ----- ------ -----
Total expenses 713,295 421,047 986,200 938,522
------- ------- ------- -------
(Loss) income from operations (339,457) (127,978) 429,013 (6,786)
-------- -------- ------- ------
Other income (expense)
Interest income 146 60 240 296
Interest expense (57,401) (57,749) (237,572) (247,738)
Loss on extinguishment of debt - - (38,232) -
Other income, net 2,460 496 3,122 2,558
----- --- ----- -----
Total other expense (54,795) (57,193) (272,442) (244,884)
------- ------- -------- --------
(Loss) income before income taxes (394,252) (185,171) 156,571 (251,670)
Income tax expense (benefit) 196 10,406 (5,817) (446,680)
--- ------ --------
Net (loss) income (394,448) (195,577) 162,388 195,010
Less: net (loss) income attributable
to noncontrolling interest (19,732) 898 54,323 4,445
------- ------ -----
Net (loss) income attributable to
SandRidge Energy, Inc. (374,716) (196,475) 108,065 190,565
Preferred stock dividends 13,881 11,548 55,583 37,442
------ ------ ------ ------
(Loss applicable) income available to
SandRidge Energy, Inc.
common stockholders $(388,597) $(208,023) $52,482 $153,123
========= ========= ======= ========
Earnings (loss) per share
Basic $(0.97) $(0.53) $0.13 $0.52
====== ====== ===== =====
Diluted $(0.97) $(0.53) $0.13 $0.52
Weighted average number of common
shares outstanding
Basic 399,430 395,255 398,851 291,869
Diluted 399,430 395,255 406,645 315,349
SandRidge Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except per share data)
December 31,
------------
2011 2010
---- ----
ASSETS
Current
assets
Cash and cash equivalents $207,681 $5,863
Accounts receivable, net 206,336 146,118
Derivative contracts 4,066 5,028
Inventories 6,903 3,945
Other current assets 16,854 14,636
------ ------
Total current assets 441,840 175,590
Oil and natural gas
properties, using full cost
method of accounting
Proved (includes development
and project costs excluded
from amortization of $231.3
million and $186.5 million) 8,969,296 8,159,924
Unproved 689,393 547,953
Less: accumulated
depreciation, depletion and
impairment (4,791,534) (4,483,736)
---------- ----------
4,867,155 4,224,141
--------- ---------
Other property, plant and
equipment, net 522,269 509,724
Restricted deposits 27,912 27,886
Derivative
contracts 26,415 -
Goodwill 235,396 234,356
Other assets 98,622 59,751
------ ------
Total assets $6,219,609 $5,231,448
========== ==========
LIABILITIES AND EQUITY
Current
liabilities
Current maturities of long-
term debt $1,051 $7,293
Accounts
payable and
accrued
expenses 506,784 376,922
Billings and estimated
contract loss in excess of
costs incurred 43,320 31,474
Derivative contracts 115,435 103,409
Asset retirement obligation 32,906 25,360
------ ------
Total current liabilities 699,496 544,458
Long-term debt 2,813,125 2,901,793
Derivative contracts 49,695 124,173
Asset retirement obligation 95,210 94,517
Other long-term obligations 13,133 19,024
------ ------
Total liabilities 3,670,659 3,683,965
--------- ---------
Commitments
and
contingencies
Equity
SandRidge
Energy,
Inc.
stockholders'
equity
Preferred stock, $0.001 par
value, 50,000 shares
authorized
8.5% Convertible perpetual
preferred stock; 2,650 shares
issued and outstanding
at December 31, 2011 and
December 31, 2010; aggregate
liquidation preference
of $265,000 3 3
6.0% Convertible perpetual
preferred stock; 2,000 shares
issued and outstanding
at December 31, 2011 and
December 31, 2010; aggregate
liquidation preference
of
$200,000 2 2
7.0% Convertible perpetual
preferred stock; 3,000 shares
issued and outstanding
at December 31, 2011 and
December 31, 2010; aggregate
liquidation preference
of
$300,000 3 3
Common stock, $0.001 par
value, 800,000 shares
authorized; 412,827 issued
and
411,953 outstanding at
December 31, 2011 and 406,830
issued and 406,360
outstanding at December 31,
2010 399 398
Additional paid-in capital 4,568,856 4,528,912
Treasury stock, at cost (6,158) (3,547)
Accumulated deficit (2,937,094) (2,989,576)
---------- ----------
Total SandRidge Energy, Inc.
stockholders' equity 1,626,011 1,536,195
Noncontrolling interest 922,939 11,288
------- ------
Total
equity 2,548,950 1,547,483
--------- ---------
Total liabilities and equity $6,219,609 $5,231,448
========== ==========
SandRidge Energy, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
-----------------------
2011 2010
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $162,388 $195,010
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for doubtful
accounts 2,511 129
Depreciation, depletion and
amortization 380,244 326,111
Impairment 2,825 -
Debt issuance costs amortization 11,372 11,006
Discount amortization on long-
term debt 2,383 2,153
Loss on extinguishment of
debt 38,232 -
Deferred income taxes (6,986) (447,500)
Unrealized (gain) loss on
derivative contracts (101,034) 283,604
Realized loss on financing
derivatives 6,591 -
(Gain) loss on sale of assets (2,044) 2,424
Investment loss (income) 115 (460)
Stock-based compensation 38,684 37,681
Changes in operating assets and
liabilities (59,796) (20,030)
------- -------
Net cash provided by operating
activities 475,485 390,128
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for
property, plant and
equipment(1) (1,743,637) (1,044,371)
Acquisition of assets, net of
cash received of $0 and
$39,518, respectively (34,628) (138,428)
Proceeds from sale of assets 859,405 204,951
Deposit received on pending
asset sale - 10,000
Refunds of restricted
deposits - 5,095
--- -----
Net cash used in investing
activities (918,860) (962,753)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 2,033,000 2,117,914
Repayments of borrowings (2,130,293) (1,789,919)
Premium on debt redemption (30,338) -
Debt issuance costs (20,326) (12,540)
Proceeds from issuance of
royalty trust units 917,528 -
Distributions to royalty trust
unitholders (57,449) -
Noncontrolling interest
distributions (2,751) (3,515)
Noncontrolling interest
contributions - 306
Proceeds from issuance of
convertible perpetual preferred
stock, net (231) 290,704
Stock-based compensation excess
tax benefit 53 15
Purchase of treasury stock (13,796) (7,169)
Dividends paid - preferred (56,742) (28,525)
Cash received on financing
derivatives 6,538 3,356
----- -----
Net cash provided by financing
activities 645,193 570,627
------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 201,818 (1,998)
CASH AND CASH EQUIVALENTS,
beginning of year 5,863 7,861
CASH AND CASH EQUIVALENTS, end
of year $207,681 $5,863
======== ======
Supplemental Disclosure of Cash
Flow Information
Cash paid for interest, net of
amounts capitalized $224,127 $210,112
Cash paid (received) for income
taxes $2,083 $(1,508)
Supplemental Disclosure of
Noncash Investing and Financing
Activities
Change in accrued capital
expenditures(1) $89,388 $85,282
Convertible perpetual preferred
stock dividends payable $16,572 $17,363
Adjustment to oil and natural
gas properties for estimated
contract loss $25,000 $105,000
Common stock issued in
connection with acquisition $- $1,246,334
Stock issued to satisfy
settlement $- $12,200
(1) Capital expenditures on an accrual basis were $1,833,025
and $1,129,653 for the years
ended December 31, 2011 and 2010, respectively.
For further information, please contact:
Kevin R. White
Senior Vice President
SandRidge Energy, Inc.
123 Robert S. Kerr Avenue
Oklahoma City, OK 73102-6406
(405) 429-5515
Cautionary Note to Investors - This press release includes 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, the information appearing under the heading 'Operational Guidance.' These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include projections and estimates of leverage, net income, drilling plans, drilling locations, funding, oil and natural gas production, derivative transactions, shares outstanding, pricing differentials, operating costs and capital spending, tax rates, descriptions of our development plans, and the timing and effect of closing the company's acquisition of Dynamic Offshore Resources, LLC. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to gas wells, the availability and terms of capital, the ability of counterparties to transactions with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in (a) Part I, Item 1A - 'Risk Factors' of our Annual Report on Form 10-K for the year ended December 31, 2010, (b) comparable 'risk factors' sections of our Quarterly Reports on Form 10-Q filed thereafter, and (c) Part I, Item 1A - 'Risk Factors' of our Annual Report on Form 10-K for the year ended December 31, 2011. All of the forward-looking statements made in this press release are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements.
SandRidge Energy, Inc. is an oil and natural gas company headquartered in Oklahoma City, Oklahoma with its principal focus on exploration and production. SandRidge and its subsidiaries also own and operate gas gathering and processing facilities and CO2 treating and transportation facilities and conduct marketing and tertiary oil recovery operations. In addition, Lariat Services, Inc., a wholly-owned subsidiary of SandRidge, owns and operates a drilling rig and related oil field services business. SandRidge focuses its exploration and production activities in the Mid-Continent, Permian Basin, Gulf of Mexico, West Texas Overthrust and Gulf Coast. SandRidge's internet address is www.sandridgeenergy.com.
SandRidge Energy, Inc.
Web site: http://www.sandridgeenergy.com/
