SandRidge Energy(US:SD)2019-05-09 18:43Financial Data and Key Metrics Changes - The company reported a net loss of $5 million in Q1 2019, a significant improvement compared to a net loss of $41 million in Q1 2018 [16] - Adjusted EBITDA remained flat at $41 million for both Q1 2019 and Q1 2018, despite a 12% decrease in average oil prices and a 36% decrease in natural gas liquid prices [16][17] - Controllable costs saw a decrease, with LOE down 3% year-over-year and G&A reduced by $4 million or 27% [18] Business Line Data and Key Metrics Changes - Total company production for the quarter was 3.2 million barrels of oil equivalent, with a composition of 27% oil, 28% NGLs, and 45% natural gas [22] - Capital expenditures for the quarter were $71 million, with $54 million allocated to drilling and completion costs [23] - The North Park gross average production was 3,600 barrels of oil per day, with a current daily spot oil rate of approximately 7,000 barrels [34] Market Data and Key Metrics Changes - The company experienced a 15% reduction in the blended price of commodities, yet managed to hold adjusted EBITDA steady [17] - The Mississippian assets contributed 2.7 million barrels of oil equivalent, with a 5% increase over Q4 2018 [36] Company Strategy and Development Direction - The company is focused on reducing cash costs and limiting capital spending to stay within annual cash flow [10] - A new business strategy emphasizes sustainable long-term success and competitive debt-adjusted per share returns [8] - The company is exploring opportunities for consolidation in the industry, anticipating increased A&D activity as companies rationalize their portfolios [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the early progress of their business strategy and the results from drilling programs in North Park and the Midcontinent areas [9][11] - The company plans to exit 2019 undrawn on its credit facility and debt-free, demonstrating a commitment to operating within cash flow [19] - Management noted that current market conditions are volatile, with majors competing for assets, which may lead to more opportunities for consolidation [42] Other Important Information - The company is currently undergoing a spring borrowing base redetermination with its bank group, with plans to amend the existing facility to extend the maturity date [20] - The company has completed the Surprise central tank battery and plans to construct additional facilities to handle future production [35] Q&A Session Summary Question: Is North Park production at its highest level? - Yes, it is correct [45] Question: What has been done to reduce costs per foot and what more is possible? - Improvements in bit selection and mud program have contributed to cost reductions, with potential to drill wells down to about $92 per foot [46][47] Question: What is the strategic perspective for M&A? - The company is looking for opportunities to acquire PDP production that comes with undeveloped opportunities presenting superior economic returns [50] Question: Are there specific regions of focus for acquisitions? - The company is focused on the United States and is opportunistic about potential acquisitions, with interest in various basins including the Permian and Bakken [51][52]