SandRidge Energy Inc. (SD): Behind The Numbers

Page 1 of 2

SandRidge Energy Inc. (NYSE:SD)Oil and gas producer SandRidge Energy Inc. (NYSE:SD) reported its first-quarter earnings after markets closed on May 7. The company barely squeaked by with a profit of just $2 million dollars which translated to earnings per share of, well, zilch. While that might sound terrible, it bested analysts’ estimates that figured the company would lose $0.06 a share on the quarter. Let’s take a look at what transpired during the quarter, which was very positive and a good indication of what’s to come.

Behind the numbers
While the headline earnings number looks weak, underneath it earnings and cash flow were pretty good for the quarter. Adjusted EBITDA came in at $270 million, which is a big increase from the $185 million in the first quarter of last year. Further, operating cash flow for the quarter was $182 million which was also well ahead of last year’s $151 million.

The company continued to maintain its industry-leading Mississippian well cost of $3.1 million during the quarter. Further, the company completed three wells with 30-day initial production of 1,000 barrels of oil equivalent per day. Finally, and most importantly, oil production in the Mississippian ticked up to 46% of overall production which is up from 45% last quarter. Producing more oil out of the Mississippian is important, as 80% of SandRidge Energy Inc. (NYSE:SD)’s cash flow from the play is from oil.

While SandRidge Energy Inc. (NYSE:SD)’s all-in strategy of focusing on the Mississippian carries risk, the good news is that the industry as a whole is reporting good numbers out of the play, which bodes well for SandRidge Energy Inc. (NYSE:SD)’s future. For example, Devon Energy Corp (NYSE:DVN) recently brought 24 wells on line and reported that the wells hit its targeted economics. It also had several wells with 30-day initial production rates between 600 and 1,000 barrels of oil equivalent per day. Meanwhile, Chesapeake Energy Corporation (NYSE:CHK) had one of its Mississippian wells achieve a peak rate of 1,485 barrels of oil equivalent per day. All this speaks of good things to come from the Lime as producers seems to be narrowing in on the sweet spot.

Shifting plans
The biggest news on the quarter is that SandRidge Energy Inc. (NYSE:SD) has decided to scale back on its capital plans for the year. The company is reducing its capital expenditures by 33% over 2012. The company now plans to spend $1.45 billion this year, which is a $700 million reduction from last year and a $300 million cut from its $1.75 billion plan to start the year. While its Permian Basin sale provided enough capital to fund the development of the Mississippian through the end of next year, the company still needs to plan ahead – trimming its plans now will help it narrow future funding shortfalls.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!