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 Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!