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SandRidge Upgraded to Outperform on Growth, Balance Sheet Strength
SandRidge EnergySandRidge Energy(US:SD) ZACKSยท2025-09-16 16:51

Core Viewpoint - SandRidge Energy has been upgraded to "Outperform" due to its operational momentum and disciplined cost structure, which provide resilience against commodity volatility [1][9] Production and Operational Performance - In Q2 2025, SandRidge's production averaged just under 18 MBoe per day, marking a 19% year-over-year increase in total volumes and a 46% rise in oil output [1] - The first Cherokee development well achieved an initial production rate of 2,300 Boe per day with 49% oil, indicating strong reservoir quality and growth potential [2] - Lease operating expenses have significantly declined, reflecting efficiency gains and integrated infrastructure advantages [3] Cost Management and Financial Health - Adjusted G&A expenses fell to $2.4 million, or $1.48 per Boe, down from $1.85 per Boe in the previous year [2] - The company has a breakeven level around $35 WTI for new wells, allowing it to sustain development even if oil prices decrease [3] - At the end of Q2, SandRidge held over $104 million in cash, equating to $2.80 per share, and had no debt [6] Natural Gas Market Position - SandRidge has benefited from a recovery in natural gas prices, with realized pricing in Q2 at $1.82 per Mcf, an improvement from earlier in the year [4] - The diversified portfolio allows for flexibility, with oil-weighted Cherokee wells providing returns in stable crude environments and gas-weighted properties benefiting from higher Henry Hub pricing [5] Shareholder Returns and Capital Management - Since the start of 2023, dividends paid totaled $4.36 per share, with a 9% increase in the regular dividend in August 2025 [7] - The company repurchased approximately $6 million worth of stock in the first half of 2025, with $69 million remaining under its current authorization [7] Future Outlook - SandRidge projects exit production rates above 19 Mboe per day by year-end, with additional completions expected to maintain momentum into 2026 [8] - The combination of production growth, improved natural gas leverage, and a strong balance sheet reduces cyclicality risk and supports a durable investment case [8]