SandRidge Energy(SD) - 2024 Q2 - Quarterly Results

Recent Highlights The company declared a cash dividend, announced a $144 million acquisition, and reported key financial metrics for Q2 2024 - The Board of Directors declared a $0.11 per share cash dividend payable on August 30, 2024[3] - The Company announced an agreement to acquire certain producing assets and leasehold interest in the Cherokee play for $144 million[3] Key Financial Highlights (Three-Month Period Ended June 30, 2024) | Metric | Amount | | :-------------------- | :---------- | | Net income | $8.8 million | | Net income per basic share | $0.24 | | Adjusted net income | $6.4 million | | Adjusted net income per basic share | $0.17 | | Adjusted EBITDA | $12.9 million | | Cash and cash equivalents (as of June 30, 2024) | $211.3 million | | Interest income | $2.5 million | | Free cash flow (six-month period) | $23.5 million | | Free cash flow conversion rate (relative to adjusted EBITDA for six months) | ~85% | Financial Results & Update This section provides an overview of the company's financial performance, focusing on profitability metrics for the recent quarter Profitability SandRidge Energy, Inc. experienced a decline in profitability metrics for the second quarter of 2024 compared to both the previous quarter and the same period last year, with net income and adjusted EBITDA showing significant decreases Profitability Metrics (Dollars in thousands, except per share data) | Metric | 2Q24 | 1Q24 | Change vs 1Q24 | 2Q23 | Change vs 2Q23 | | :---------------------------------- | :----- | :----- | :------------- | :----- | :------------- | | Net income | $8,794 | $11,125 | $(2,331) | $16,637 | $(7,843) | | Net Income per share | $0.24 | $0.30 | $(0.06) | $0.45 | $(0.21) | | Net cash provided by operating activities | $11,412 | $15,681 | $(4,269) | $24,005 | $(12,593) | | Adjusted net income | $6,353 | $8,394 | $(2,041) | $14,049 | $(7,696) | | Adjusted net income per share | $0.17 | $0.23 | $(0.06) | $0.38 | $(0.21) | | Adjusted operating cash flow | $15,384 | $17,455 | $(2,071) | $22,585 | $(7,201) | | Adjusted EBITDA | $12,934 | $14,717 | $(1,783) | $19,980 | $(7,046) | | Free cash flow | $8,967 | $14,539 | $(5,572) | $9,055 | $(88) | - Free cash flow conversion rate: Approximately 85% relative to adjusted EBITDA for the six months ended June 30, 2024[4] Operational Results & Update This section details the company's operational performance, including production volumes, revenue, realized prices, and cost management efforts Production, Revenue & Realized Prices Production volumes saw a slight quarter-over-quarter decrease and a more significant year-over-year decline. While realized oil prices increased, natural gas and NGL prices decreased, impacting overall revenues Production, Revenue & Realized Prices | Metric | 2Q24 | 1Q24 | Change vs 1Q24 | 2Q23 | Change vs 2Q23 | | :---------------------------------- | :----- | :----- | :------------- | :----- | :------------- | | Production: | | | | | | | MBoe | 1,363 | 1,376 | (13) | 1,593 | (230) | | MBoed | 15.0 | 15.1 | (0.1) | 17.5 | (2.5) | | Oil as percentage of production | 14% | 15% | (1)% | 18% | (4)% | | Natural gas as percentage of production | 54% | 58% | (4)% | 54% | —% | | NGLs as percentage of production | 32% | 27% | 5% | 28% | 4% | | Revenues: | | | | | | | Oil, natural gas and NGL revenues | $25,977 | $30,283 | $(4,306) | $33,419 | $(7,442) | | Oil as percentage of revenues | 57% | 51% | 6% | 59% | (2)% | | Natural gas as percentage of revenues | 11% | 20% | (9)% | 20% | (9)% | | NGLs as percentage of revenues | 32% | 29% | 3% | 21% | 11% | | Realized Prices: | | | | | | | Realized oil price per barrel | $79.54 | $75.08 | $4.46 | $68.02 | $11.52 | | Realized natural gas price per Mcf | $0.66 | $1.25 | $(0.59) | $1.31 | $(0.65) | | Realized NGL price per barrel | $18.99 | $23.65 | $(4.66) | $15.97 | $3.02 | | Realized price per Boe | $19.06 | $22.01 | $(2.95) | $20.99 | $(1.93) | Operating Costs Lease operating expense (LOE) for Q2 2024 was $8.7 million, or $6.41 per Boe, as the Company continues its focus on cost management and maximizing asset value - Lease operating expense (LOE) was $8.7 million or $6.41 per Boe during the second quarter of 2024[6] - The Company continues to focus on operating costs, prudent expenditure programs, cost management efforts, and continuous pursuit of efficiency[6] Production Optimization Program SandRidge is committed to optimizing its stable, low-decline production base through high-return projects such as workovers, artificial lift improvements, and recompletions, while maintaining capital discipline in a changing commodity price environment - The Company focuses on optimizing its stable, low-decline production base, with an estimated single-digit annual PDP decline rate over the next ten years[7] - High-return projects include workovers, artificial lift improvements, recompletions of 'behind pipe' pay, and restimulation of existing intervals[7] - All projects must meet high rate of return thresholds, and the Company remains capital disciplined[7] Liquidity & Capital Structure The company maintains a strong liquidity position with significant cash reserves and no outstanding debt obligations - As of June 30, 2024, the Company had $211.3 million of cash and cash equivalents, including restricted cash[8] - The Company has no outstanding term or revolving debt obligations[8] Dividend Program This section outlines the company's dividend distributions, including recent declarations and historical special and quarterly dividend payments Dividend Program (Dollars in thousands) | Metric | Total | 2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | | :-------------------- | :-------- | :----- | :----- | :----- | :----- | :----- | | Special dividends | $130,207 | $— | $55,868 | $— | $— | $74,339 | | Quarterly dividends | $15,639 | $4,103 | $4,096 | $3,721 | $3,719 | $— | | Total dividends | $145,846 | $4,103 | $59,964 | $3,721 | $3,719 | $74,339 | Dividends per share | Metric | Total | 2Q24 | 1Q24 | 4Q23 | 3Q23 | 2Q23 | | :-------------------- | :-------- | :----- | :----- | :----- | :----- | :----- | | Special dividends per share | $3.50 | $— | $1.50 | $— | $— | $2.00 | | Quarterly dividends per share | $0.42 | $0.11 | $0.11 | $0.10 | $0.10 | $— | | Total dividends per share | $3.92 | $0.11 | $1.61 | $0.10 | $0.10 | $2.00 | - On August 6, 2024, the Board declared a $0.11 per share cash dividend payable on August 30, 2024[9][10] Acquisitions The company recently announced a significant acquisition in the Cherokee play and completed another smaller acquisition to expand its asset base - On July 29, 2024, SandRidge agreed to acquire producing assets and leasehold interests in the Cherokee play of the Western Anadarko Basin for $144 million cash, expected to close in Q3 2024[11][12] - The Cherokee acquisition includes 42 producing wells, 4 drilled uncompleted (DUC) wells, and leasehold interest in 11 drilling and spacing units, projected to meaningfully increase SandRidge's EBITDA and cash flow[11][12] - On June 13, 2024, the Company closed on a separate acquisition of producing oil and gas assets in Alfalfa, Grant, and Woods counties, Oklahoma, for approximately $2 million[12] Outlook The company is focused on growing asset value through prudent capital allocation to high-return projects and evaluating future merger and acquisition opportunities - SandRidge remains focused on growing asset value safely, responsibly, and efficiently, with prudent capital allocations to high-return projects[13] - Standalone projects include artificial lift conversions, high-graded re-fracturing and recompletion, and opportunistic leasing to bolster future development and complement Cherokee assets[13] - The Company continues to monitor commodity prices and evaluate further merger and acquisition opportunities, leveraging its strong balance sheet[13][14] Environmental, Social, & Governance ("ESG") The company maintains a strong commitment to ESG principles, including no routine flaring, pipeline water transport, and workforce safety - SandRidge maintains its ESG commitment, including no routine flaring of produced natural gas[15] - Over 95% of produced water is transported via pipeline instead of truck[15] - The Company emphasizes workforce safety and training, with dedicated personnel monitoring safety standards[15] Conference Call Information This section provides details for the upcoming Q2 2024 earnings conference call, including registration and webcast information - The Q2 2024 earnings conference call will be held on Thursday, August 8, 2024, at 1:00 pm CT[16] - Participants can register online at https://registrations.events/direct/Q4I231503145728 for dial-in information[16] - A live audio webcast and archived replay will be available on SandRidge's investor relations website[16] About SandRidge Energy, Inc. SandRidge Energy, Inc. is an independent oil and gas company focused on development, acquisition, and production in the Mid-Continent region - SandRidge Energy, Inc. (NYSE: SD) is an independent oil and gas company[18] - The Company is engaged in the development, acquisition, and production of oil and gas assets[18] - Its primary area of operations is the Mid-Continent region in Oklahoma and Kansas[18] Operational and Financial Statistics (Unaudited) This section presents unaudited detailed operational and financial statistics, including production volumes, average prices, costs, and earnings per share Production - Total Total oil, natural gas, and NGL production volumes decreased for both the three and six months ended June 30, 2024, compared to the prior year, with daily production also showing a decline Total Production | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Oil (MBbl) | 185 | 288 | 393 | 549 | | Natural Gas (MMcf) | 4,443 | 5,185 | 9,250 | 10,097 | | NGL (MBbl) | 437 | 441 | 804 | 861 | | Oil equivalent (MBoe) | 1,363 | 1,593 | 2,739 | 3,093 | | Daily production (MBoed) | 15.0 | 17.5 | 15.0 | 17.1 | Average price per unit Realized oil prices increased year-over-year, while natural gas prices significantly decreased. NGL prices showed a modest increase for the three-month period but a slight increase for the six-month period Average Price Per Unit | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Realized oil price per barrel - as reported | $79.54 | $68.02 | $77.18 | $70.99 | | Realized natural gas price per Mcf - as reported | $0.66 | $1.31 | $0.97 | $2.00 | | Realized NGL price per barrel - as reported | $18.99 | $15.97 | $21.11 | $20.19 | | Realized price per Boe - as reported | $19.06 | $20.99 | $20.54 | $24.76 | | Net realized price per Boe - including impact of derivatives | $19.06 | $20.99 | $20.54 | $26.66 | Average cost per Boe Average lease operating costs per Boe increased for both the three and six months ended June 30, 2024, compared to the prior year, as did depletion costs Average Cost Per Boe | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Lease operating | $6.41 | $5.53 | $7.17 | $6.63 | | Production, ad valorem, and other taxes | $1.35 | $1.72 | $1.36 | $2.10 | | Depletion | $3.19 | $2.35 | $3.08 | $2.33 | Earnings per share Basic and diluted earnings per share, as well as adjusted net income per share, decreased significantly for both the three and six months ended June 30, 2024, compared to the same periods in 2023 Earnings Per Share | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.24 | $0.45 | $0.54 | $1.10 | | Diluted EPS | $0.24 | $0.45 | $0.54 | $1.09 | | Adjusted net income per share (Basic) | $0.17 | $0.38 | $0.40 | $1.08 | | Adjusted net income per share (Diluted) | $0.17 | $0.38 | $0.40 | $1.07 | Weighted average number of shares outstanding The weighted average number of common shares outstanding, both basic and diluted, saw a slight increase for the three and six months ended June 30, 2024, compared to the prior year Weighted Average Number of Shares Outstanding (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | 37,083 | 36,892 | 37,063 | 36,876 | | Diluted | 37,158 | 37,097 | 37,108 | 37,085 | Capital Expenditures This section details the company's capital expenditures for the six months ended June 30, 2024, across drilling, leasehold, and other categories Capital Expenditures (Six Months Ended June 30, 2024, In thousands) | Category | Amount | | :----------------------------------------------------------------------- | :----- | | Drilling, completion, and capital workovers | $2,468 | | Leasehold and geophysical | $900 | | Capital expenditures (on an accrual basis) (excluding acquisitions and plugging and abandonment) | $3,368 | Capitalization This section provides a snapshot of the company's capitalization, including cash, debt, and total stockholders' equity as of June 30, 2024 Capitalization (In thousands) | Metric | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :------------ | :---------------- | | Cash, cash equivalents and restricted cash | $211,292 | $253,944 | | Long-term debt | $— | $— | | Total debt | $— | $— | | Total SandRidge Energy, Inc. stockholders' equity | $424,807 | $468,111 | | Total capitalization | $424,807 | $468,111 | Condensed Consolidated Income Statements (Unaudited) This section presents the unaudited condensed consolidated income statements, detailing revenues, expenses, and net income for the reported periods Condensed Consolidated Income Statements (In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $25,977 | $33,419 | $56,260 | $76,566 | | Total expenses | $19,757 | $19,612 | $41,622 | $41,555 | | Income from operations | $6,220 | $13,807 | $14,638 | $35,011 | | Net income (loss) | $8,794 | $16,637 | $19,919 | $40,395 | | Net income (loss) per share (Basic) | $0.24 | $0.45 | $0.54 | $1.10 | | Net income (loss) per share (Diluted) | $0.24 | $0.45 | $0.54 | $1.09 | Condensed Consolidated Balance Sheets (Unaudited) This section provides the unaudited condensed consolidated balance sheets, outlining the company's assets, liabilities, and equity at period-end Condensed Consolidated Balance Sheets (In thousands) | Metric | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :------------ | :---------------- | | Total current assets | $237,162 | $277,854 | | Oil and natural gas properties, net | $155,316 | $156,120 | | Total assets | $529,571 | $574,166 | | Total current liabilities | $46,157 | $49,324 | | Total liabilities | $104,764 | $106,055 | | Total stockholders' equity | $424,807 | $468,111 | Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents the unaudited condensed consolidated statements of cash flows, detailing cash movements from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, In thousands) | Activity | 2024 | 2023 | | :----------------------------------------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $27,093 | $63,852 | | Net cash used in investing activities | $(5,119) | $(23,024) | | Net cash used in financing activities | $(64,626) | $(74,269) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(42,652) | $(33,441) | | Cash, cash equivalents and restricted cash, end of period | $211,292 | $224,027 | Non-GAAP Financial Measures This section provides reconciliations of various non-GAAP financial measures to their most directly comparable GAAP counterparts Reconciliation of Net Cash Provided by Operating Activities to Adjusted Operating Cash Flow Adjusted operating cash flow, a non-GAAP measure, is presented as net cash provided by operating activities before changes in operating assets and liabilities, providing insight into the Company's ability to internally fund activities Adjusted Operating Cash Flow Reconciliation (In thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $11,412 | $24,005 | $27,093 | $63,852 | | Changes in operating assets and liabilities | $3,972 | $(1,420) | $5,746 | $(7,574) | | Adjusted operating cash flow | $15,384 | $22,585 | $32,839 | $56,278 | Reconciliation of Free Cash Flow Free cash flow, a non-GAAP measure, is reconciled as net cash provided by operating activities plus net cash (used in) provided by investing activities less the cash flow impact of acquisitions and divestitures, indicating the Company's capacity for internal funding Free Cash Flow Reconciliation (In thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $11,412 | $24,005 | $27,093 | $63,852 | | Net cash used in investing activities | $(4,015) | $(13,616) | $(5,119) | $(23,024) | | Acquisition of assets | $2,103 | $— | $2,103 | $— | | Proceeds from sale of assets | $(533) | $(1,334) | $(571) | $(1,334) | | Free cash flow | $8,967 | $9,055 | $23,506 | $39,494 | Reconciliation of Net Income to EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are presented as non-GAAP measures to provide a clearer view of the Company's financial and operating performance by excluding non-cash and non-recurring items from net income EBITDA and Adjusted EBITDA Reconciliation (In thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $8,794 | $16,637 | $19,919 | $40,395 | | EBITDA | $14,839 | $22,018 | $31,751 | $50,880 | | Adjusted EBITDA | $12,934 | $19,980 | $27,651 | $51,194 | Reconciliation of Net Income Available to Common Stockholders to Adjusted Net Income Available to Common Stockholders Adjusted net income, a non-GAAP measure, is reconciled by excluding items like restructuring expenses and interest income from net income, offering a more comparable view of operational trends and performance Adjusted Net Income Reconciliation (In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2024 | $/Diluted Share | Three Months Ended June 30, 2023 | $/Diluted Share | | :------------------------------------------------- | :------------------------------- | :-------------- | :------------------------------- | :-------------- | | Net income available to common stockholders | $8,794 | $0.24 | $16,637 | $0.45 | | Restructuring expenses | $81 | $— | $262 | $0.01 | | Interest income | $(2,522) | $(0.07) | $(2,850) | $(0.08) | | Adjusted net income available to common stockholders | $6,353 | $0.17 | $14,049 | $0.38 | | Total adjusted net income per share (Basic) | $0.17 | | $0.38 | | | Total adjusted net income per share (Diluted) | $0.17 | | $0.38 | | | Metric | Six Months Ended June 30, 2024 | $/Diluted Share | Six Months Ended June 30, 2023 | $/Diluted Share | | :------------------------------------------------- | :------------------------------- | :-------------- | :------------------------------- | :-------------- | | Net income available to common stockholders | $19,919 | $0.54 | $40,395 | $1.09 | | (Gain) loss on derivative contracts | $— | $— | $(1,447) | $(0.04) | | Settlement gains (losses) on derivative contracts | $— | $— | $5,876 | $0.16 | | Employee termination benefits | $— | $— | $19 | $— | | Restructuring expenses | $81 | $— | $301 | $0.01 | | Interest income | $(5,253) | $(0.14) | $(5,381) | $(0.15) | | Adjusted net income available to common stockholders | $14,747 | $0.40 | $39,763 | $1.07 | | Total adjusted net income per share (Basic) | $0.40 | | $1.08 | | | Total adjusted net income per share (Diluted) | $0.40 | | $1.07 | | Reconciliation of General and Administrative to Adjusted G&A Adjusted G&A, a non-GAAP measure, is reconciled by removing non-cash stock-based compensation and other non-recurring items from general and administrative expenses, facilitating better cost management analysis and comparability Adjusted G&A Reconciliation (In thousands, except per Boe amounts) | Metric | Three Months Ended June 30, 2024 | $/Boe | Three Months Ended June 30, 2023 | $/Boe | | :---------------------------------- | :------------------------------- | :---- | :------------------------------- | :---- | | General and administrative | $3,050 | $2.24 | $2,476 | $1.55 | | Stock-based compensation | $(536) | $(0.39) | $(550) | $(0.34) | | Adjusted G&A | $2,514 | $1.85 | $1,926 | $1.21 | | Metric | Six Months Ended June 30, 2024 | $/Boe | Six Months Ended June 30, 2023 | $/Boe | | :---------------------------------- | :------------------------------- | :---- | :------------------------------- | :---- | | General and administrative | $6,382 | $2.33 | $5,385 | $1.74 | | Stock-based compensation | $(1,072) | $(0.39) | $(946) | $(0.30) | | Adjusted G&A | $5,310 | $1.94 | $4,439 | $1.44 | Cautionary Note to Investors This section advises investors that the report contains forward-looking statements subject to various risks and uncertainties, and actual results may differ materially - This press release contains forward-looking statements subject to various risks and uncertainties[47] - Risks include volatility of oil and natural gas prices, success in discovering and developing reserves, availability of capital, and regulatory changes[47] - Actual results may differ materially from projections, and the Company undertakes no obligation to update these statements except as required by law[47]