SD - SandRidge Energy

[Cardboard]

"What everybody is missing here is chances of survival for SD."

 

Surviving and delivering value for shareholders are two different things. They are able to buyback some debt at a discount but, they are also issuing a ton of convertibles. If a company ends up unable to redeem a convertible, the principal amount is normally converted to shares at the prevailing share price (not the conversion price). It means a near complete transfer of ownership from the common shareholders to convertible owners. If they don`t come to that and achieve a turnaround, then the conversion price on the convertible also ensures dilution to existing shareholders. IMO, the share price is currently reacting quite negatively to this deal likely for the above.

 

If senior securities are currently available with the potential of a 5 to 12.5 baggers as pointed out by Thepupil, then why risking money on the common currently at $0.43? Take the tax loss and move to these safer securities with still very high potential.

 

I would also highly recommend that you perform a calculation of EV/boe/d and Net debt/boe/d, translate that into CAD$ and compare that with other players with similar costs and liquids production % in Canada. I guarantee you that you will find better opportunities and companies with more flexibility such as the ability to sell non-core assets which SD no longer has.

 

Cardboard

[cogitator8]

Thanks for the input, I dont think it will hurt me to buy prefs too. I will do the calulation you mentioned and compare with other players in Canada.

[cogitator8]

I think people are extrapolating that oil prices will stay at this level for prolonged period of time. Oil prices have black swan like characteritics and with Putin trying his best, it wont be long before oil will be up to $70. This is repeat of Afghanistan for Russia, whenever oil prices go south, they create turmoil. So leave aside prefs and common, once oil prices go up , SD will have lot of value. I really don't have much to loose, as my Average price for common is $.43. So I will stick to my conviction and wait for oil prices to recover.

[ourkid8]

Great acquisition!

 

http://finance.yahoo.com/news/sandridge-energy-inc-acquires-north-211500498.html

 

SandRidge Energy, Inc. Acquires North Park Basin Niobrara Shale Oil Assets for $190 Million in Cash

 

Adds 136,000 Largely Contiguous Net Acres and Multiyear Niobrara Shale Drilling Inventory in North Park Basin, Colorado

Diversifies Into Proven High Quality Repeatable Oil Asset Matching SandRidge's Operating Strengths

High Quality Stacked Pay Resource Play with Over 1,300 Gross Locations Identified

Derisked by 16 Existing Horizontal Producers, Expect to Add ~100 PUD Locations at Year End

First Well to Spud in January 2016, with 13 Approved Drilling Permits

[ourkid8]

GREAT QUARTER!

 

http://finance.yahoo.com/news/sandridge-energy-inc-updates-shareholders-211500090.html

 

SandRidge Energy, Inc. Updates Shareholders on Operations and Reports Financial Results for Third Quarter and First Nine Months of 2015

 

Adjusted EBITDA of $118 Million for the Third Quarter and Adjusted Loss of $0.07 per Diluted Share

Third Quarter Production of 79.9 MBoepd (31% Oil, 17% NGLs)

Raising 2015 Production Guidance Range to 29.5-30.5 MMBoe from 29.0-30.5 MMBoe While Lowering Lifting Costs per Boe Range to $10.50-$11.50 from $11.50-$12.50

Achieved Year End Goal of $2.3 Million per Mississippian Lateral in Third Quarter

Bond Repurchases and Exchanges Address $525 Million of Debt

$1.3 Billion of Liquidity at End of Third Quarter, Including $790 Million in Cash

Events Subsequent to Third Quarter 2015

Agreement to Acquire North Park Basin Niobrara Shale Oil Assets for $190 Million Adds 1.0 MBoepd of Production, 27 MMBoe of Proved Reserves (82% Oil) and Materially Expands Drilling Inventory

Additional Bond Repurchases and Exchanges Address $400 Million of Debt

Acquisition of Piñon Gathering System Eliminates ~$40 Million of Annual Expenses

Affirmed $500 Million Borrowing Base and Amended Senior Credit Facility

[BargainValueHunter]

http://www.claremoreprogress.com/news/is-sandridge-energy-inc-near-crumbling/article_fb9c2a32-8c6f-11e5-b9a4-37cfd5f41331.html

 

SandRidge Energy Inc.’s most important assets are at the epicenter of Oklahoma’s ongoing earthquake problem. The driller’s precarious financial position, combined with the risk it faces from temblor swarms near its wastewater injection wells, could cause the company to become insolvent if regulators shut down its disposal wells.

 

Regulators’ efforts to reduce earthquake risk in the most seismically active area of the state could put the company at risk, because its operations are so narrowly focused in one area.

 

SandRidge invested more than $200 million in infrastructure to ship salty, toxic wastewater from petroleum wells through pipes to disposal wells nearby. One in six wells the OCC put under a microscope belongs to SandRidge, accounting for nearly 85 percent of the company’s 125 active disposal sites.

[cogitator8]

SD has clearly said in their CC, they have no exposure to OK sites.

[cogitator8]

SD has No operation in Logan county, only few in Oklahoma county, so far no well have been shut down.

[ourkid8]

Anyone understand the potential of shut downs in county's where SD drills?

 

SD has No operation in Logan county, only few in Oklahoma county, so far no well have been shut down.

[finetrader]

An another nice stock pick by Hamblin Watsa

 

 

http://newsok.com/article/5470996

[ERICOPOLY]

An another nice stock pick by Hamblin Watsa

 

 

http://newsok.com/article/5470996

 

Meanwhile, they dissed TSLA stock in their annual report.

 

We'll see which stock does better in 20 years.

[Bog]

Everyone makes mistakes and this is a big one. As long as they learn something from this, that prevents them from making another mistake like this in the future.

[Liberty]

Filing for BK:

 

http://www.wsj.com/articles/sandridge-energy-files-for-bankruptcy-protection-1463404621

 

Now 2 pennies a share on the pink sheets, down 99.94% since 2007.

[Cardboard]

If Watsa had sided with the activists instead of blaming them for removing Tom Ward who was clearly abusing the corporation, it would not have risen to $20 a share as he thought it was worth from some public statements but, it sure could have been sold in early 2014 for $7, $8 or even $10 a share to another firm.

 

Instead, it is now worth zero. And Mr. Ward received something like a $100 million golden parachute on his way out and sold all his shares in the $5 range.

 

Cardboard

[writser]

Since then: emerged from BK. Trying to buy Bonanza Creek Energy today. Market does not like the deal.

[LR1400]

This may be a good one to buy into it now.

 

Icahn is the largest shareholder and is putting the heat on them.They just fired the CEO and CFO.

 

Debt is only $37mill, yes that low. Debt to equity is like .05.

 

This seems like a decent upside potential with virtually no downside, at least no downside of complete collapse again.

 

What am I missing?

[Lakesider]

 

Was looking at this yesterday and was on my way to a buy. Icahn has played his hand and and the stock has popped 9% today.

 

 

https://www.cnbc.com/2018/04/05/carl-icahn-plans-a-boardroom-battle-for-sandridge-energy-as-he-advocates-a-sale.html

[LR1400]

I let it sink back down and bought in.

[Lakesider]

Looks likely Sandridge will see some bids soon.

 

https://www.prnewswire.com/news-releases/sandridge-energy-provides-update-on-strategic-review-process-300666905.html

[Lakesider]

https://www.reuters.com/article/us-sandridge-agm-icahn/activist-icahn-gains-control-of-board-in-proxy-fight-at-sandridge-energy-idUSKBN1JF229

 

Pretty pleased with how this is going. When I entered I figured it should be worth at least the $590M that midstates offered. As we are approaching that value now I was wondering if anyone else had any insights to valuation? Any thoughts appreciated.

 

Thanks

[Sombunall]

In case you missed it:

 

http://adventuresincapitalism.com/2018/11/18/40-less-carl-paid/

 

Seems attractive -- no debt, Icahn controls it and you can buy it for a lot less than he did.

 

 

 

[samwise]

This seems to be cheapest oil and gas stock I can find versus pv-10 or standardized measure for both 2016 and 2017. It has no debt and a financial owner who won't pursue growth rates like most oilmen.

 

So even at the low SEC prices of 2016 you have a bargain. It's also cheaper than the recent private bids , although the oil price decline might mean you can't get those bids right now.

 

According to the guys at VIC, you are getting >30% yields on developed and producing wells. But of course they are spending the cash flow on drilling their other fields.

 

I thought this was a gas company until I saw their revenue split. Most is oil and NGL. So they should do well with a rebound in oil or gas prices, or a private sale, or by developing their other basins and then selling. Or they could waste all cash flow in new basins that are uneconomical.

[Spekulatius]

They tried to sell themselves and only got bids for $13/ share and that was when the price of crude was higher. I agree it looks cheap, but why are informed industry insiders not bidding more?

[samwise]

Good question. I don't know what those investors were underwriting. One possible cause I know of is: At the time of the bids there was an overhang on their Colorado assets due to some upcoming public vote. That has since been resolved.

 

In the same vein: Why are informed public markets energy investors not bidding more? Pessimism, fund outflows from energy, sales by those looking for a quick deal (the VIC author), oil prices falling, take your pick. Markets are inefficient and that includes private markets.

 

Are energy insiders and private equity guys the best capital allocators? Should I trust their valuation or the standardized measure? How does one independently value an upstream E&P company? My answer is reserves and the standardized measure (adjusted for commodity prices if you are smart enough to do that).

 

If they put current producing assets in a trust, they should generate a good yield and IRR. The fact that they are trying other options means they think they can do even better. In normal E&Ps that means better for management, but since Icahn is in control I think this means better for shareholders.

 

Also note that they did not accept the bids. One definition of intrinsic value is a price where two well informed participants agree to a deal.

 

 

[Gregmal]

This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this.

 

SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off.