SandRidge Energy(US:SD)2020-03-05 10:38Financial Data and Key Metrics Changes - In Q4 2019, the company reported a net loss of $249 million compared to a net income of $54 million in 2018, with a $4 million net loss after adjusting for a $244 million impairment and other non-recurring items [19] - Adjusted EBITDA for Q4 was $32 million, a 24% increase over Q3 but down from $45 million in 2018 [20] - Capital expenditures for 2019 totaled $162 million, with $13 million spent in Q4, leading to $19 million of free cash flow during the quarter [20][21] - Lease operating expenses in Q4 were $19 million, down 15% year-over-year, while adjusted G&A was $5 million, a 20% decrease from 2018 [21] Business Line Data and Key Metrics Changes - The North Park production, which is 100% oil, maintained attractive margins around $30 per BOE, while the midcontinent, generating 70% of 2019 revenue, saw operating margins drop to approximately $10 per BOE from over $18 per BOE in 2018 due to declining natural gas prices and crashing NGL realizations [16][18] - The company drilled 21 new wells and brought 31 wells to sales in 2019, with production for the year at 12 million BOE, a 3% decline from 2018 [28] Market Data and Key Metrics Changes - Natural gas prices decreased continuously throughout 2019, with NGL realizations dropping to just over $12 per blended NGL barrel, half of what was realized in 2018 [17][18] - The company expects natural gas and NGL prices to normalize closer to historical averages throughout 2020 based on forward contracts [19] Company Strategy and Development Direction - The company aims to provide shareholder value by remaining patient during low price periods, focusing on cash flow generation, and maintaining a clean balance sheet [8][12] - Plans for 2020 include reducing lease operating expenses by nearly 20% from 2019 and focusing capital expenditures on high-return projects with quick payouts [9][23] - The company is evaluating merger and acquisition opportunities, believing that bid-ask spreads will narrow in the current environment [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2019 due to volatile oil prices and declining natural gas prices, which led to a deterioration in earnings and non-cash impairments [14][15] - The 2020 budget assumes oil prices averaging $53 per barrel and natural gas prices at $2.15 per MCF, with a focus on minimizing capital spending to maximize free cash flow [23][42] Other Important Information - Proved reserves decreased from 160 million BOE at year-end 2018 to 90 million BOE at year-end 2019, primarily due to lower SEC commodity pricing and production [38] - The company has implemented significant reductions in corporate office staff and expects total G&A to improve from $29 million in 2019 to $19 million in 2020, a decrease of 34% [43] Q&A Session Summary - The call concluded with management expressing commitment to driving shareholder value and looking forward to updating progress in the next quarter [46]