SandRidge Hedges $1.1B of Oil Revenues through 2012

SandRidge Energy reported its financial and operational results for the quarter and year ended December 31, 2009.

Financial Highlights

Fourth Quarter

  • Adjusted net income available to common stockholders (which excludes non-cash asset impairments, unrealized gains or losses on derivative contracts and gains or losses on the sale of assets) of $26.3 million, or $0.14 per share, in fourth quarter 2009 compared to adjusted net income available to common stockholders of $10.2 million, or $0.06 per share, in fourth quarter 2008
  • Adjusted EBITDA of $150.2 million compared to $157.9 million in fourth quarter 2008
  • Operating cash flow of $112.8 million compared to $114.7 million in fourth quarter 2008
  • Net loss applicable to common stockholders of $434.2 million (including $388.9 million non-cash full cost ceiling impairment), or $2.36 per share fully diluted, attributable to lower natural gas and oil pricing levels during 2009 compared to net loss applicable to common stockholders of $1.59 billion (including $1.86 billion non-cash full cost ceiling impairment), or $9.78 per share fully diluted, in fourth quarter 2008
  • No borrowings outstanding under credit facility at December 31, 2009

Full Year

  • Adjusted net income available to common stockholders (which excludes non-cash asset impairments, unrealized gains or losses on derivative contracts and gains or losses on the sale of assets) of $139.8 million, or $0.80 per share, in 2009 compared to adjusted net income available to common stockholders of $142.5 million, or $0.92 per share, in 2008
  • Adjusted EBITDA of $584.0 million compared to $678.2 million in 2008
  • Operating cash flow of $417.6 million compared to $540.3 million in 2008
  • Net loss applicable to common stockholders of $1.78 billion (including $1.69 billion non-cash full cost ceiling impairment), or $10.20 per share fully diluted, attributable to lower natural gas and oil pricing levels during 2009 compared to net loss applicable to common stockholders of $1.46 billion (including $1.86 billion non-cash full cost ceiling impairment), or $9.36 per share fully diluted, in 2008

Adjusted net income available to common stockholders, adjusted EBITDA and operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under "Non-GAAP Financial Measures" beginning on page 10.

Operational Highlights and Year End Reserves

  • Average of six rigs running in the Pinon Field area during fourth quarter 2009. Currently 12 rigs running in the Pinon Field.
  • Closed $800 million acquisition of Permian Basin oil assets from Forest Oil Corporation in December 2009. Currently six rigs running in the Permian Basin.
  • 2009 natural gas and oil production increased to 104.8 Bcfe (287 MMcfe per day) compared to 101.4 Bcfe (277 MMcfe per day) in 2008.
  • Net acreage position in Permian Basin at December 31, 2009 increased by approximately 100,000 net acres from December 31, 2008 to a current total of approximately 150,000 net acres.
  • Oil reserves increased 144% year over year using new SEC 12-month average pricing. Oil reserves increased 180% and 182% using alternate pricing scenarios based upon spot prices at December 31, 2009 and the average 10-year NYMEX strip price at December 31, 2009, respectively.
  • Oil reserves represent 69% of total PV-10 value using new SEC 12-month average pricing. Oil reserves represent 54% and 49% of total PV-10 value using alternate pricing scenarios based upon spot prices at December 31, 2009 and the average 10-year NYMEX strip price at December 31, 2009, respectively.
  • Proved reserves total 1.312 Tcfe at December 31, 2009 based upon new SEC 12-month average pricing. Proved reserves total 2.566 Tcfe and 2.678 Tcfe using alternate pricing scenarios based upon spot prices at December 31, 2009 and the average 10-year NYMEX strip price at December 31, 2009, respectively.

Tom L. Ward, Chief Executive Officer of SandRidge, commented, "We have transformed our company to one whose oil reserves comprise approximately 50% to 70% of its total PV-10 value based on the pricing scenarios included in our sensitivity analysis. We are now poised to grow through the development of both oil and gas properties and expect our percentage of revenues from oil sales to continue to increase in the future. Our earnings potential is strong with over 80% of our estimated 2010 production hedged at $9.15 per Mcfe. We have hedged over $1.1 billion of oil revenues through 2012. We are also excited about the exploration opportunities that lie ahead in the WTO and have spud two wells to test two distinct structures that have been identified by 3-D seismic. Lastly, the Century Plant is scheduled to start up this summer, enabling us to expand our drilling of the Warwick Caballos reservoir in the Pinon Field.

"While gas PUDs were reduced on a PV-10 basis using a price of $3.87 per Mcf as determined under the new SEC price rule, we estimate our total proved reserves would have increased by about 20% had we used year end 2009 prices under the old SEC price rule. Under all pricing scenarios, the PV-10 value per Mcfe of our reserves ranks highly among our peers. As we approach start up of the Century Plant, we have ramped up drilling in the Pinon Field from a low of four rigs in the fourth quarter of 2009 to 12 rigs currently. In addition, we are currently running six rigs in the Permian Basin, where we are achieving exceptional rates of return at current oil prices. We are fortunate to be able to maximize earnings by running an appropriate mix of rigs in our oil and gas plays and having the option to adjust further from gas to oil drilling as dictated by project economics and return on investment."
 

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