SandRidge Energy , an E&P company operating in the Midcontinent Basin in Oklahoma and Kansas, has reported financial and operational results for the three-month period ended March 31, 2023.

Highlights

• First quarter net income was $23.8 million, or $0.64 per basic share. Adjusted net income was $25.7 million, or $0.70 per basic share
• Adjusted EBITDA of $31.2 million in the first quarter
• Approximately $30.4 million of free cash flow in the first quarter, which represents a conversion rate of approximately 98% relative to adjusted EBITDA 
• The Company drilled and completed two wells during the three months ended March 31, 2023. SandRidge plans to drill and complete two additional operated wells, which will conclude its program for the year
• As of March 31, 2023, the Company returned 182 wells to production since the beginning of 2021, helping to flatten expected annual PDP decline to an average of ~8% over the next ten years
• Approximately $2.5 million in interest income during the first quarter
• Realized commodity derivative settlement gains of approximately $5.9 million in the first quarter
• First quarter G&A was $2.9 million, or $1.94 per Boe and adjusted G&A was approximately $2.5 million, or $1.68 per Boe

Financial Results & Update

For the three months ended March 31, 2023, the Company reported net income of $23.8 million, or $0.64 per basic share, and net cash provided by operating activities of $39.8 million. After adjusting for certain items, the Company's adjusted net income(1) amounted to $25.7 million, or $0.70 per basic share, adjusted operating cash flow totaled $33.7 million and adjusted EBITDA(1) was $31.2 million for the quarter. 

The Company generated approximately $30.4 million of free cash flow in the first quarter, which represents a conversion rate of approximately 98% relative to adjusted EBITDA.

First quarter realized oil, natural gas, and natural gas liquids prices, before the impact of derivatives, were $74.26 per Bbl, $2.73 per Mcf and $24.62 per Bbl, respectively, compared to $79.10 per Bbl, $4.40 per Mcf and $25.73 per Bbl in the prior quarter.

Production

Production totaled 1,500 MBoe (16.7 MBoed, 17% oil, 28% NGLs and 55% natural gas) for the three months ended March 31, 2023 compared to 1,606 MBoe (17.8 MBoed, 13% oil, 33% NGLs, and 54% natural gas) for the three months ended March 31, 2022. SandRidge's capital development program has helped increase oil content as a percentage of total production.

Development Program

SandRidge operated one drilling rig in the first quarter and successfully drilled and completed two wells targeting the Meramec formation in the core of the NW Stack play as part of its previously announced capital development program. The Company plans to drill and complete two additional operated wells, which will conclude its program for the year. SandRidge will continue to monitor opportunities for future development, with its primary focus being to generate high rates of return. The higher oil content of its new NW stack wells versus the Company's base production was the primary driver of SandRidge's oil production increasing by approximately 22% in the first quarter of 2023 versus the first quarter of 2022. This increases the Company's oil as a percentage of total production and enhances its commodity realizations.

Well Reactivation & Rod Pump Conversion Program

Since the beginning of 2021, the Company has returned 182 wells to production. During the first quarter, SandRidge also completed four artificial lift conversions, helping to lower forward-looking operating costs for this well set. These projects have helped lower SandRidge's expected annual PDP decline to an average of ~8% over the next ten years. The Company continues to ensure that all projects meet high rate of return thresholds and remains capital disciplined as the commodity price landscape has changed in recent months. As a result, reactivation activity has decreased in 2023 but could increase again as commodity prices recover.

Outlook

SandRidge will continue to focus on growing the cash value and generation capability of its asset base in a safe, responsible and efficient manner, while exercising prudent capital allocations to projects it believes provide high rates of returns in the current commodity price outlook. These projects could include well reactivations, artificial lift conversions to more efficient and cost effective systems, and remaining drilling in high-graded areas. The Company will continue to monitor forward-looking commodity prices, results, costs and other factors that could influence returns on investments, which will continue to shape its disciplined development decisions in 2023 and beyond. SandRidge will also continue to maintain the optionality to execute on value accretive merger and acquisition opportunities that could bring synergies, leverage the Company's core competencies, complement its portfolio of assets, further utilize its approximately $1.6 billion of net operating losses ("NOLs"), or otherwise yield attractive returns for its shareholders.

KeyFacts Energy: SandRidge US onshore country profile