valuecfa Posted June 10, 2015 Share Posted June 10, 2015 It may not happen this year as drilling is now extremely limited at Sandridge, and the scale back in drilling would mean much less revenue to the MLP. Link to comment Share on other sites More sharing options...
thepupil Posted June 10, 2015 Share Posted June 10, 2015 sorry if I wasn't clear, my doubts are not with respect to the timing of the spinoff or whether the IRS will approve MLP status. I have full confidence they'll IPO this division, but I have no idea how creditors would allow them to spin it to shareholders of common equity. Why wouldn't they IPO and use the proceeds to pay down debt or build cash? I don't see any evidence they will IPO a portion of the biz and then spin the rest of those shares to common equity holders because that would be fraudulent conveyance should SD restructure in the next few years (which the price of junk bonds and the prefs would indicate is likely). Maybe you were just being imprecise with your language in saying "spun" or maybe you know something about the cap structure and covenants that I don't, which is why I'm trying to understand. It would be most unusual for a company in SD's condition to transfer value to equity holders in such a way. Link to comment Share on other sites More sharing options...
valuecfa Posted June 10, 2015 Share Posted June 10, 2015 sorry if I wasn't clear, my doubts are not with respect to the timing of the spinoff or whether the IRS will approve MLP status. I have full confidence they'll IPO this division, but I have no idea how creditors would allow them to spin it to shareholders of common equity. Why wouldn't they IPO and use the proceeds to pay down debt or build cash? I don't see any evidence they will IPO a portion of the biz and then spin the rest of those shares to common equity holders because that would be fraudulent conveyance should SD restructure in the next few years (which the price of junk bonds and the prefs would indicate is likely). Maybe you were just being imprecise with your language in saying "spun" or maybe you know something about the cap structure and covenants that I don't, which is why I'm trying to understand. It would be most unusual for a company in SD's condition to transfer value to equity holders in such a way. Yes. An partial IPO with proceeds to go to Sandridge shareholders Link to comment Share on other sites More sharing options...
thepupil Posted June 10, 2015 Share Posted June 10, 2015 and by "proceeds going to shareholders" you mean "proceeds going to sandridge, the company, which is encumbered by $4B of claims ahead of shareholders", correct? Edit: See attached cap structure updated for recent issuance, $4.6B of debt and preferred + $1B of cash from the note issuance gets you to $3.6B of net debt. The HY bonds are at 2000 basis point spreads and the prefs and common are just options. The reason I'm pestering is I think your language of "spun to shareholders" and "proceeds going to shareholders" is misleading because it implies shareholders own something. Under current conditions, all they own is an option, they won't see a dime of those proceeds before the other bigger lions (creditors) have their piece of the carcass, unless there is something that is not obvious here. Link to comment Share on other sites More sharing options...
valuecfa Posted June 10, 2015 Share Posted June 10, 2015 and by "proceeds going to shareholders" you mean "proceeds going to sandridge, the company, which is encumbered by $4B of claims ahead of shareholders", correct? Yes. Sandridge the company owned by its shareholders...not a cash distribution to shareholders. Link to comment Share on other sites More sharing options...
bmichaud Posted June 19, 2015 Share Posted June 19, 2015 Wow Link to comment Share on other sites More sharing options...
ourkid8 Posted June 19, 2015 Share Posted June 19, 2015 Down 17% today, who is still holding this stock? I wish I held this stock in my non-registered account so I can claim a capital loss but unfortunately it's in my TFSA... :-( Link to comment Share on other sites More sharing options...
kfh227 Posted July 2, 2015 Share Posted July 2, 2015 I might dip into the SDRXP preferreds. Thoughts? Link to comment Share on other sites More sharing options...
ourkid8 Posted July 3, 2015 Share Posted July 3, 2015 Numerous execs just added to their position in Sandridge, the most notable one was James Bennett. Mr. Bennett recently purchased $53k in stock and has approx. $1mm position in the company. (Relatively small but a positive sign when execs add) Link to comment Share on other sites More sharing options...
cogitator8 Posted August 7, 2015 Share Posted August 7, 2015 I listened to Sandridge Energy cc this week, I am quite surprised that nobody commented on massive progress they have made in improving their operation, liquidity. It seem like people forgot about how to think like an owner when buying a company. I was quite impressed by use of multilateral wells they using to extract oil, which decrease their cost of extraction. So I am just looking at big picture here, they have ample liquidity for them to last through next 24 mths, they are much more efficient and have laser sharp focus on improving cost structure but also liquidity. It is true, they are quite indebted, but they are not going bankrupt. Now does anybody believe here that oil prices will go down to $30 and stay there for 1-2 years. I certainly don't claim to know that. I find odds in my favor here, so I am adding more, which will bring my cost basis to $1. I learned from Buffett, to always look at big picture and perspective, and calculate your odds. Link to comment Share on other sites More sharing options...
thepupil Posted August 7, 2015 Share Posted August 7, 2015 I realize I'm a broken record here but I sure hope you aren't contemplating buying the common...The unsecureds are at $25-$30 and the 8 3/4% 2nd lien financing they did in May is in the low $70's. Just buy the unsecured a if you think this has more than a snowballs chance in hell of surviving. I was thinking of putting a couple percent in the 7 1/2's @ $25 just for shits and giggles along with some XCO bonds in the $30's as a "fairfax energy graveyard" basket. Link to comment Share on other sites More sharing options...
cogitator8 Posted August 7, 2015 Share Posted August 7, 2015 If you look at their presentation and listen to CC, they are migrating to drilling multilateral wells, which can be drilled from same pod and is much less expensive to drill, also they are moving everything to chester area, where all the oil is. So far 40% of their wells are multilateral, which they limited to 6 total wells. So they will hunker down and survive this low oil prices. Nobody ever been correct in predicitng oil prices, so I will keep my options open. I agree with you about buying their debt and preferreds. You have to look 2-3 years from now for this thing to work out. We human beings are not good in predicting, I will go with what I see, I know they are not going bankrupt anytime soon. Link to comment Share on other sites More sharing options...
Jurgis Posted August 7, 2015 Share Posted August 7, 2015 I realize I'm a broken record here but I sure hope you aren't contemplating buying the common...The unsecureds are at $25-$30 and the 8 3/4% 2nd lien financing they did in May is in the low $70's. Just buy the unsecured a if you think this has more than a snowballs chance in hell of surviving. I was thinking of putting a couple percent in the 7 1/2's @ $25 just for shits and giggles along with some XCO bonds in the $30's as a "fairfax energy graveyard" basket. I'll +1 this. Link to comment Share on other sites More sharing options...
muscleman Posted August 9, 2015 Share Posted August 9, 2015 I realize I'm a broken record here but I sure hope you aren't contemplating buying the common...The unsecureds are at $25-$30 and the 8 3/4% 2nd lien financing they did in May is in the low $70's. Just buy the unsecured a if you think this has more than a snowballs chance in hell of surviving. I was thinking of putting a couple percent in the 7 1/2's @ $25 just for shits and giggles along with some XCO bonds in the $30's as a "fairfax energy graveyard" basket. This is the strategy that Wilbur Ross has been pursuing in one of his recent CNBC interview. The bankruptcy filings jumped 77% this year, mostly O&G companies. http://www.wsj.com/articles/u-s-bankruptcy-filings-jump-77-in-july-paced-by-energy-sector-1438892376 Buying the debt of SD means eventually it will file for ch 11, the debt will likely be converted to equity and you will become a new owner. The question is, after the debt is cut to 0, will the new SD survive under $43 oil? I think it is unlikely. It is still essentially a bet on the commodity price, and your upside isn't that high if you go with the buy debt, hope for recovery route. Why bother? Link to comment Share on other sites More sharing options...
cogitator8 Posted August 11, 2015 Share Posted August 11, 2015 The question is, will oil prices stay at this level for another 2 years, can anybody be certain of that ? Just like nobody saw oil prices dropping last year, nobody can guess when it will go up, and that is one of the critical factor besides SD's indebtedness ! Even if there is some improvement whether in oil price or debt, stock price of SD will reecover. So I see odds are in my favor. This is as distressed situation as it can be with massive turn around in SD's operation. I think everybody assume SD will go bankrupt, which I think is a manifestation of loss aversion, however if one can see beyond that, as business owner, chances are decent SD will survive. Link to comment Share on other sites More sharing options...
ourkid8 Posted August 14, 2015 Share Posted August 14, 2015 http://investors.sandridgeenergy.com/m/#/Press_Releases/5ad03a0e-a51d-4dc6-96a2-51e310ac8ce2 Company will purchase $250mm aggregate principal debt for $94.5mm and change $275mm notes into convertible debt. Is the conversion details the following? If SD stock trades at a 40% premium over the VWAP threshold of $1.10 per share for an average of 20 days Sandridge has a right to convert the debt into common shares at a conversion price of $2.75 per share? Link to comment Share on other sites More sharing options...
morningstar Posted August 14, 2015 Share Posted August 14, 2015 http://investors.sandridgeenergy.com/m/#/Press_Releases/5ad03a0e-a51d-4dc6-96a2-51e310ac8ce2 Company will purchase $250mm aggregate principal debt for $94.5mm and change $275mm notes into convertible debt. Is the conversion details the following? If SD stock trades at a 40% premium over the VWAP threshold of $1.10 per share for an average of 20 days Sandridge has a right to convert the debt into common shares at a conversion price of $2.75 per share? Stock would have to trade at $3.85/share for the company to force conversion ($2.75 + 40%). Though for the first couple years they would need to pay an additional cash premium to do so. Link to comment Share on other sites More sharing options...
ourkid8 Posted September 24, 2015 Share Posted September 24, 2015 Anyone fortunate enough to be still holding Sandridge? Reverse split on the way to ensure we are compliant with listing requirements... Link to comment Share on other sites More sharing options...
cogitator8 Posted September 29, 2015 Share Posted September 29, 2015 I am still holding it, but i bought it around $0.50, you may want to see their latest investor presentation posted today and also they are presenting in a meeting today. SD is not going bankrupt anytime soon, it is a distressed situation, if you have stomach to digest it then buy, otherwise it is not for everyone. Link to comment Share on other sites More sharing options...
ourkid8 Posted October 5, 2015 Share Posted October 5, 2015 TW sold this asset for $200mm in 2009 and we are repurchasing it for $126mm in 2015 and it will provide an immediate $40mm savings a year... Great job! http://investors.sandridgeenergy.com/m/#/Press_Releases/f84e107f-20a2-4540-ab10-d4e06d75f670 OKLAHOMA CITY, Oct. 5, 2015 /PRNewswire/ -- SandRidge Energy, Inc. (the "Company") (SD) today announced that it has entered into an agreement to acquire the Piñon Gathering Company, LLC from EIG Global Energy Partners for $48 million cash and $78 million of its 8.75% Senior Secured Notes due 2020. The Piñon Gathering Company, LLC owns approximately 370 miles of gathering lines supporting the natural gas and CO2 production from the Company's Piñon field in West Texas. As a result of the transaction, the Company will eliminate minimum volume commitment payments of approximately $40 million per year, forecasted to continue until 2021 and additional contractual fees thereafter, as well as secure a strategic asset supporting its West Texas natural gas production. James Bennett, President and CEO, commented, "We are pleased to announce the repurchase of our West Texas Piñon gas gathering infrastructure. By eliminating payments related to contractual volume commitments, this transaction will immediately increase annual EBITDA by approximately $40 million by lowering our overall lease operating and gathering expense. This transaction is also consistent with our stated goals of reducing existing contractual liabilities related to legacy operations." The transaction is anticipated to close in the fourth quarter of 2015, subject to the expiration or termination of the applicable waiting period under the Hart Scott Rodino Act. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 8, 2015 Share Posted October 8, 2015 Another bargain for SD, this debt repurchase deal is certainly a step in the right direction, I think so far SD has increased its EBITDA by $ 100 million, including repurchase of Pinon Gathering asset. Link to comment Share on other sites More sharing options...
thepupil Posted October 8, 2015 Share Posted October 8, 2015 cogitator, i'm not sure if you answered this, but do you hold the common? If so, why? The preferred is at 8 cents on the dollar SDRXP and the bonds are in the 20's. I'll repeat "just buy the unsecured a if you think this has more than a snowballs chance in hell of surviving" (or the pref if you are feeling real bulled up). Is there some scenario you envision where all the prefs and unsecureds get restructured and all the benefit goes to the common? Or some other reason? Link to comment Share on other sites More sharing options...
cogitator8 Posted October 8, 2015 Share Posted October 8, 2015 This company is doing balance sheet restructuring, so one by one they will buy back their debt as they move forward, and/or it will be converted into common, so in fact common has more upside than prefs and debt. What everybody is missing here is chances of survival for SD. I think by now it should be clear that they are not going any where. Commodity stocks do drop like that but when commodity prices recover they will buy back their debt or convert to common and then common will have much more upside. I look at it this way, SD is aware of their debt selling for cheap and they will not miss any chance to buy it back or retire its debt. Buying common is buying cheap option in increase in oil prices. I think SD is in advanced stages of restructuring and management is very good in capital allocation. Also everybody is buying prefs, I am just a contrarian. Link to comment Share on other sites More sharing options...
thepupil Posted October 8, 2015 Share Posted October 8, 2015 Thanks. I for one have no position or view. I personally could never bring myself to buy a common stock when there a securities senior to it trading at 8 cents or 20 cents. I would think that as more securities get bought back/restructured, the remaining ones become better positioned (and less likely to settle at very low prices), but who knows, you could be right. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 8, 2015 Share Posted October 8, 2015 Here is my argument about debt, they have been buying back debt at 70% discount, and management has already indicated that reducing debt is their main goal at this point. Simultaneously they are improving earning too. SD is using hydra well formation for drilling, which is very cost efficient, you will see major improvement in their drilling cost as we go forward. For a oil company to deliver in such a low cost environment is a major achievement, not many companies can pull that off. Buying debt has limited upside, and certainly low risk. But buying common has lot more upside, with very small risk, particularly now they are buying assets for cheap. Link to comment Share on other sites More sharing options...
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