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SandRidge Energy(SD) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited Q1 2025 financial statements reflect increased assets, equity, and net income, supported by strong operating cash flow Condensed Consolidated Balance Sheets Total assets and stockholders' equity increased as of March 31, 2025, driven by cash and oil/gas properties Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $130,993 | $127,653 | | Cash and cash equivalents | $99,726 | $98,128 | | Net oil and natural gas properties | $302,778 | $298,201 | | Total assets | $588,259 | $581,511 | | Total current liabilities | $61,550 | $60,595 | | Total liabilities | $123,346 | $120,980 | | Total stockholders' equity | $464,913 | $460,531 | | Total liabilities and stockholders' equity | $588,259 | $581,511 | Condensed Consolidated Income Statements Q1 2025 net income rose to $13.0 million, driven by a 41% increase in total revenues exceeding expense growth Condensed Consolidated Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $42,604 | $30,283 | | Total expenses | $30,415 | $21,865 | | Income from operations | $12,189 | $8,418 | | Net income | $13,049 | $11,125 | | Basic EPS | $0.35 | $0.30 | | Diluted EPS | $0.35 | $0.30 | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity grew in Q1 2025, driven by net income, partially offset by share repurchases and dividends - Key activities affecting equity in Q1 2025 included $13.0 million of net income, $5.1 million in stock repurchases, and $4.1 million in dividends paid to shareholders19 - In Q1 2024, dividend payments were significantly higher at $60.0 million compared to $4.1 million in Q1 202519 Condensed Consolidated Statements of Cash Flows Q1 2025 operating cash flow increased to $20.3 million, resulting in a net cash increase of $1.6 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,331 | $15,681 | | Net cash used in investing activities | ($9,255) | ($1,104) | | Net cash used in financing activities | ($9,478) | ($60,028) | | Net increase (decrease) in cash | $1,598 | ($45,451) | - Financing cash outflow was significantly lower in Q1 2025 due to reduced dividend payments ($4.1 million vs. $59.7 million in Q1 2024) and the addition of $5.0 million in stock repurchases21 Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, derivative contracts, legal contingencies, NOLs, and equity activities including share repurchases - As of March 31, 2025, the company had open derivative contracts for oil, natural gas, and NGLs, including fixed-price swaps and costless collars, to manage commodity price risk47 - The company faces a potential indemnification liability related to the Lanier Trust litigation, but cannot estimate a possible loss and has not established any liabilities for the matter54 - The company has approximately $1.6 billion in federal NOL carryforwards to offset future taxable income, protected by a Tax Benefits Preservation Plan extended to July 2026606667 - During Q1 2025, the company repurchased 0.5 million shares for $5.1 million. A subsequent dividend of $0.11 per share was declared in May 20256474 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes improved Q1 2025 results to higher production and prices, maintaining strong liquidity and no debt Overview and Outlook The company, an independent oil and gas producer, focuses on growing its asset base in the Cherokee Shale Play through development and optimization - The company's strategic projects include one-rig development in the Cherokee Shale Play, an artificial lift conversion program, and a leasing program to support future development82 - The production mix in Q1 2025 was 16.8% oil, 48.9% natural gas, and 34.3% NGL, compared to 15.1% oil, 58.2% natural gas, and 26.7% NGL in Q1 202480 Consolidated Results of Operations Q1 2025 total revenues increased to $42.6 million due to higher production and prices, with operating expenses rising from the Cherokee acquisition Revenue by Product (in thousands) | Product | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Oil | $18,880 | $15,599 | $3,281 | | Natural gas | $12,673 | $6,007 | $6,666 | | NGL | $11,051 | $8,677 | $2,374 | | Total revenues | $42,604 | $30,283 | $12,321 | Production and Pricing | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total volumes (MBoe) | 1,607 | 1,376 | 231 | | Average daily total volumes (MBoe/d) | 17.9 | 15.1 | 2.8 | | Average price per Boe | $26.51 | $22.01 | $4.50 | - Depreciation and depletion expense increased significantly to $8.4 million from $4.1 million YoY, primarily due to the increased book value of proved properties from the 2024 Cherokee Play acquisition8890 - No impairment was recorded in Q1 2025 as the full cost pool balance did not exceed the ceiling limitation calculated using SEC prices92 Liquidity and Capital Resources The company maintained strong liquidity with $101.1 million cash and no debt, supported by $20.3 million operating cash flow - As of March 31, 2025, the company had $101.1 million in cash and cash equivalents and no outstanding debt98 Capital Expenditures (in thousands, accrual basis) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Drilling, completion, and capital workovers | $7,935 | $745 | | Leasehold and geophysical | $1,391 | $84 | | Capital expenditures (accrual) | $9,326 | $829 | | Acquisitions | $2,568 | $— | | Total Capital, including acquisitions | $11,894 | $829 | - Cash used in financing activities in Q1 2025 included $5.0 million for stock repurchases and $4.1 million for dividends105 Quantitative and Qualitative Disclosures About Market Risk The company manages commodity price volatility risk through derivative contracts and mitigates credit risk with investment-grade counterparties - The most significant market risk is from volatile oil, natural gas, and NGL prices, which the company manages through derivative contracts111 Open Derivative Contracts as of March 31, 2025 (Summary) | Commodity | Instrument | Period | Daily Volume | Avg. Price / Range | | :--- | :--- | :--- | :--- | :--- | | Oil (Bbl) | Fixed Price Swaps | Apr 2025 - Jun 2026 | 300 - 500 | $68.67 - $71.60 | | Natural Gas (MMBtu) | Fixed Price Swaps | Apr 2025 - Dec 2026 | 4,500 - 8,500 | $4.09 - $4.17 | | Natural Gas (MMBtu) | Costless Collars | Apr 2025 - Dec 2026 | 4,500 - 12,000 | $3.35 Put / $8.20 Call | | NGL (Bbl) | Fixed Price Swaps | Apr 2025 - Dec 2025 | 300 - 325 | $11.76 - $39.69 | - Credit risk is managed by transacting with multiple investment-grade counterparties and utilizing master netting agreements, which limit loss exposure to the net amounts due115116 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025119 - No changes occurred in the company's internal control over financial reporting during Q1 2025 that materially affected, or are reasonably likely to materially affect, these controls120 PART II. OTHER INFORMATION Legal Proceedings The company is involved in ongoing litigation, including the Lanier Trust case and a dispute with insurance carriers over a $17 million settlement - The company faces potential indemnification costs for the SandRidge Mississippian Trust I in the Lanier Trust lawsuit but cannot estimate the potential loss54122 - The company is in a legal dispute with insurance carriers who are seeking reimbursement for a $17 million settlement they funded. The company disputes any liability55 Risk Factors No new risk factors are presented; the report refers to those disclosed in the company's 2024 Annual Report on Form 10-K - For information on risk factors, the report refers to Item 1A of the company's 2024 Form 10-K123 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 452,230 shares at $11.27 each, part of a $75.0 million program with $69.7 million remaining Share Repurchases - Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | — | | Feb 2025 | — | $— | — | | Mar 2025 | 464,945 | $11.27 | 452,230 | | Total | 464,945 | | 452,230 | - The share repurchase program, initiated in May 2023, authorizes up to $75.0 million in purchases. As of March 31, 2025, $69.7 million remained available under the program127126 Defaults Upon Senior Securities The company reported no defaults upon senior securities - The company reported no defaults upon senior securities128 Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company129 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter130 Exhibits This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL data, with other documents incorporated by reference - The exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act131 - Interactive Data Files (XBRL) are included as exhibits 101 and 104131