SandRidge Energy(SD) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, the company generated adjusted EBITDA of $24 million, with a total of$ 69 million for the year, despite headwinds from natural gas prices [7] - Cash, including restricted cash, was just under $100 million at year-end, representing more than$ 2.68 per share of common stock outstanding [8] - The company paid $72 million in dividends in 2024, including$ 16 million in regular and $56 million in special dividends [9] - Net income for Q4 was approximately$ 18 million or $0.47 per basic share, and$ 63 million or $1.69 per basic share for the year [13] Business Line Data and Key Metrics Changes - Total production averaged over 19 MBoe per day in Q4, representing a 19% increase year-over-year on a Boe basis and a 28% increase on an oil basis [21] - Adjusted G&A for Q4 was approximately$ 2.4 million or $1.39 per Boe, and$ 9.3 million or $1.54 per Boe for the year [13][47] - The company generated free cash flow before acquisitions of approximately$ 13 million during Q4 and $48 million for the full year [13] Market Data and Key Metrics Changes - Commodity price realizations for Q4 were$ 71.44 per barrel of oil, $1.47 per Mcf of gas, and$ 18.19 per barrel of NGLs [11] - For the full year, realizations were $74.31 per barrel of oil,$ 1.10 per Mcf of gas, and $18.87 per barrel of NGLs [11] - Natural gas prices increased from the low$ 2s to the mid- $4s, which is expected to boost revenue [22] Company Strategy and Development Direction - The company plans to focus on developing high-return Cherokee assets and anticipates growing oil production volumes further [21] - The strategy includes maximizing the value of incumbent assets, exercising capital stewardship, and maintaining optionality for M&A opportunities [41][43] - The company aims to fund capital expenditures using cash flows from operations and cash on hand, with a capital program budget of$ 66 million to $85 million for 2025 [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about production growth, targeting a 30% increase in oil production for the next year [72] - The company is well-positioned to take advantage of lower commodity environments by acquiring additional producing properties at attractive prices [22] - Management emphasized the importance of monitoring commodity prices and adjusting development plans accordingly [34] Other Important Information - The company has no term debt or revolving debt obligations and continues to operate within cash flow [10] - The federal NOL position was approximately$ 1.6 billion at quarter-end, allowing the company to shield cash flows from federal income taxes [12] Q&A Session Summary Question: What would the company like to see to get closer to the high end of production range? - Management would like to see gas prices stabilize at $5 and WTI over$ 70 to achieve higher production levels [53] Question: Does the company's infrastructure provide a unique negotiating position for direct energy deals? - The infrastructure does provide strategic advantages, but selling gas directly to customers is complicated due to processing requirements [56] Question: Is the increased CapEx necessary to maintain current production levels? - The increase in CapEx is due to the acquisition of high-graded undeveloped properties, which are expected to yield high returns [64] Question: What is the expected production growth for 2026? - The company anticipates additional growth potential in 2026, with some new production coming online from current drilling [76] Question: What percentage of production is hedged? - The company has hedged just under 60% of PDP volume, focusing on risk management while maintaining exposure to upside [81]