SANDRIDGE UPDATE
SandRidge's top executive outlines company's plan
SandRidge's top executive outlines new strategy company intends to follow
SandRidge Energy Inc. is operating under a refined business strategy as it heads into 2019. Paul McKinney, the firm's recently hired president and CEO, discussed the plan at the top of a conference call the company held with analysts on Wednesday morning to discuss its 2018 fourth-quarter and fullyear results. The strategy, which he said he and other top executives developed, has five key points. They are: • Attracting and retaining the best people by motivating them to succeed through compensation and high-caliber development and human resources programs. • Practicing operational excellence that includes going about its business in a safe and environmentally responsible manner to deliver low cost, efficient and consistent execution of the company's drilling and completion programs. • Prioritizing its work programs through assessing full ranges of risks to accurately and consistently predict results. • Reducing break-even costs by actively upgrading investment opportunities and pursuing financially accretive acquisitions, mergers and dispositions. • Protecting the balance sheet by balancing programs with available dollars and by using leverages responsibly through hedging and other financial strategies to protect its capital programs. “One of the first things we did upon my arrival was to develop” the strategy, McKinney told analysts Tuesday. "We deliberated on the principles and industrybest practices that we believe lead to success and organized them so we could articulate them to our employees and to ensure they become a defining aspect of our culture. “This management team knows not only that we need to do all those things to be successful. We know that we need to do all of them, all the time.”
Financial updates
McKinney; Michael Johnson, the firm's senior vice president and chief financial officer; and John Suter, the firm's chief operating officer, also provided analysts with financial and operational updates for the firm leading into 2019. Johnson said SandRidge either met or exceeded guidance it had issued for 2018 on production, lease operating expenses and its capital expenditures. He said the firm held $11 million in cash and had $345 million available under its revolving credit agreement on Feb. 20. He also discussed the deals SandRidge made in November to strengthen its operational profile. On Nov. 1, the company sold nearly 1,500 shallow, low-performing wells in the Permian Basin, plus about 13.1 million SandRidge Permian Trust shares, to an unaffiliated, unidentified party for $14.5 million. The next day, SandRidge spent $25.1 million to buy oil and gas properties, rights and related assets in the Mississippi Lime and STACK areas of Oklahoma and Kansas. While Johnson said the deals weren't particularly large, he did say they were meaningful because they enabled SandRidge to simplify its portfolio, improve its profitability, enhance value and allow it to focus on core operations and development strategies. “It was an effective way to redeploy proceeds to a bolt on acquisition that didn't require additional staff,” Johnson noted, adding he expects that to be the first of many future initiatives the company will undertake to boost returns. Sutter, meanwhile, talked to analysts about ongoing efforts SandRidge is making to test out its Niobrara Shale play in its North Park Basin area in Colorado, its experimentation
with gas to liquids technology at production sites there and the company's ongoing development of its Mid-Continent holdings in Oklahoma and Kansas. They said the company plans to spend between $160 million and $180 million on capital expenditures in 2019, with between $115 million and $125 million of that being used todrill and complete wells. They also expect SandRidge will produce between 11.4 million and 12 million barrels of oil equivalent, which includes between 3.7 million and 3.9 million barrels of oil, between 2.5 million and 2.6 million barrels of natural gas liquids and between 31 billion and 33 billion cubic feet of natural gas. At the top of the call, McKinney also thanked immediate-past President Bill Griffin for the work he did the past year to lead SandRidge. “His leadership, hard work and deeprooted knowledge of our industry were instrumental in achieving numerous accomplishments during his tenure and set the groundwork for SandRidge's path, going forward,” McKinney said.