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SandRidge Energy (SD) 7 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 10:18 pm ET
1min read

In the recent earnings call, SandRidge Energy reported a positive third quarter, highlighting the successful acquisition in the Western Anadarko Basin and the company's commitment to generating free cash flow from its producing assets. Grayson Pranin, the CEO, and other executives provided insights into the company's financial health, operational achievements, and future plans.

Financial Performance and Strategic Acquisition

SandRidge Energy reported a third quarter with adjusted EBITDA of nearly $18 million, despite the downturn in natural gas prices. The company's strong balance sheet, with no debt and a substantial NOL position, has been instrumental in shielding its cash flows from federal income taxes. The recent acquisition in the Western Anadarko Basin, which includes 44 producing wells and 4 drilled but uncompleted wells, has significantly boosted the company's production, with 19 MBoe per day, made up of 52% liquids. This acquisition has not only bolstered the company's base production and cash flow levels but also diversified its commodity mix, providing commodity optionality for future investments.

Operational Efficiency and Cost Discipline

The company's operational efficiency and cost discipline were highlighted, with a 9% reduction in lease operating expenses for the quarter despite the incremental costs associated with the acquisition. The integration of these new assets has been successful, with cost efficiencies achieved and a focus on optimizing production from existing wells. The installation of artificial lift systems and completion of heel completions, recompletions, and refracs have significantly boosted production and lowered operating costs.

Commodity Price Realizations and Outlook

SandRidge Energy's commodity price realizations were impacted by ethane recovery, with natural gas and natural gas liquid pricing affected. However, the company remains optimistic about future price realizations, with the forecasted increase of Henry Hub expected to translate into improved price realizations and higher benchmark prices. The company's strong balance sheet and financial flexibility position it well to respond to changes in commodity prices.

ESG Commitment and Future Plans

SandRidge Energy's commitment to ESG responsibilities was emphasized, with a focus on growing the cash value and generation capability of its business in a safe, responsible, and efficient manner. The company remains vigilant in evaluating merger and acquisition opportunities in a disciplined manner, with a focus on maintaining its financial flexibility and return of capital program.

Looking forward, SandRidge Energy plans to further progress its Cherokee development, extending capital investment in high-return projects to maintain production levels and provide further oil diversification. The company's strategic acquisitions and operational efficiency initiatives position it well for future growth, with a focus on maximizing shareholder value through strategic opportunities and a disciplined approach to capital allocation.

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