Drilling & Completions | Quarterly / Earnings Reports | Fourth Quarter (4Q) Update | Reserves | Financial Results | Capital Markets | Capital Expenditure

SandRidge Energy Fourth Quarter, Full Year 2021 Results

Share Print Bookmark    |    Monday,March 14,2022

SandRidge Energy, Inc. announced financial and operational results for the quarter and fiscal year ended December 31, 2021.

Recent Highlights:

• 2021 net cash⁽¹⁾ increased by $131.3 million year-over-year to $139.5 million, which represents net cash of $3.80 per share of common stock issued and outstanding as of December 31, 2021
• Generated Adjusted EBITDA of $113.5 million in 2021 compared to $53.4 million in the prior year
• Generated net income of $116.7 million, or $3.21 per share in 2021. Adjusted net income was $96.3 million, or $2.65 per share
• Announced 2022 operational and capital expenditure guidance, including the drilling and completion of 9 new wells on the Company's Northwest Stack acreage and the continuation of its high-return well reactivation program
• Decreased Adjusted G&A⁽²⁾ by $5.8 million to $8.3 million, or $1.22 per Boe, from $14.1 million, or $1.62 per Boe, in the prior year
• As of December 31, 2021, the Company returned 129 wells to production that were previously curtailed due to the 2020 commodity price downturn contributing to a flat Mid-Continent production profile over the course of the year
• Decreased 2021 LOE by $7.4 million to $36.0 million, or $5.30 per Boe, from $43.4 million, or $4.99 per Boe, in the prior year

Financial Results & Update

Profitability & Realized Pricing

For the quarter, the Company reported net income of $36.8 million, or $1.01 per share, and net cash provided by operating activities of $43.9 million. After adjusting for certain items, the Company's adjusted net income⁽²⁾ amounted to $32.9 million, or $0.90 per share, operating cash flow⁽²⁾ totaled $37.3 million and adjusted EBITDA was $37.5 million for the quarter. The Company defines and reconciles adjusted net income, adjusted EBITDA and other non-GAAP financial measures to the most directly comparable GAAP measure in supporting tables at the conclusion of this press release.

Fourth quarter realized oil, natural gas, and natural gas liquids prices, before the impact of derivatives,⁽³⁾ were $75.72, $3.94 and $28.39, respectively, compared to $69.40, $2.89 and $26.93 in the prior quarter.

For the full year 2021, the Company reported net income of $116.7 million, or $3.21 per share, and net cash provided by operating activities of $110.3 million. After adjusting for certain items, the Company's adjusted net income amounted to $96.3 million, or $2.65 per share, operating cash flow totaled $112.7 million and adjusted EBITDA was $113.5 million for the year.

During the fourth quarter of 2021, lease operating expense ("LOE") was $9.7 million or $5.74 per Boe compared to $9.1 million, or $5.27 per Boe in the prior quarter.

For the three months ended December 31, 2021, general and administrative expense ("G&A") was $2.8 million, or $1.67 per Boe compared to $2.2 million, or $1.29 per Boe in the prior quarter. Adjusted G&A⁽²⁾ was $2.5 million, or $1.46 per Boe during the fourth quarter of 2021 compared to $2.0 million, or $1.15 per Boe in the prior quarter.

The Company did not repurchase any shares during the fourth quarter, under the Program announced in August 2021, which authorizes the Company to purchase an aggregate of $25.0 million of the Company's common stock, in accordance with Rule 10b-18 of the Exchange Act. Subject to applicable rules and regulations, repurchases under the Program can be made from time to time in open markets at the Company's discretion, and in compliance with safe harbor provisions, or in privately negotiated transactions. The Program does not require any specific number of shares be acquired and can be discontinued by the Company's Board of Directors at any time.

Operational Results & Update

Production

Production totaled 1,697 MBoe (18.4 MBoed, 13% oil, 34% NGLs and 53% natural gas) for the quarter and 6,793 MBoe (18.6 MBoed, 14% oil, 33% NGLs and 53% natural gas) for the full year of 2021. Total production includes North Park Basin prior to February 5, 2021.

Production in the Mid-Continent totaled 1,697 MBoe (18.4 MBoed, 13% oil, 34% NGLs and 53% natural gas) for the quarter and 6,726 MBoe (18.4 MBoed, 13% oil, 34% NGLs and 53% natural gas) for the full year of 2021.

The Company plans to drill and complete 9 new wells with high rates of return on its previously delineated Northwest Stack acreage in 2022. Sustained increases in commodity prices, along with SandRidge's position as a low-cost operator in the area, will help the Company deliver strong full-cycle returns through its budgeted drilling program. In addition to these new wells, the Company plans to continue its well reactivation program throughout the year. These development plans are reflected in the 2022 Operational and Capital Expenditure Guidance section of this press release.

During the fourth quarter of 2021, the Company continued returning wells to production that were previously curtailed due to the commodity price downturn in the first half of 2020 and, in many cases, improving their production potential through modest capital improvements. Focused efforts to improve operating costs, along with commodity prices rebounding from their 2020 lows, have bolstered the economics of these well reactivation projects. High rates of return and low execution risk support the Company's belief that these projects represent an efficient use of capital. As of December 31, 2021, the Company brought 129 wells back online. Approximately 108 of these wells required workovers to return to service and accounted for capital expenditures of $7.0 million and expense dollars of $1.2 million. The balance of the wells required little to no expense to reactivate.

Proved Developed PV-10

As outlined in the table below under "Year End 2021 Estimated Proved Reserves," SandRidge's SEC proved developed reserve PV-10 is approximately $433.0 million. Management believes the unaudited proved developed PV-10 reserve value of SandRidge's Mid-Continent assets to be approximately $546.0 million,⁽⁴⁾ with an effective date of January 1, 2022, as routinely updated from the Company's engineered year-end reserves, consistent with standard industry reserve practice using NYMEX strip pricing as of March 2, 2022.

Environmental, Social, and Governance ("ESG")

SandRidge maintains its Environmental, Social, and Governance ("ESG") commitment. The Company continues to investigate the technical feasibility and commercial viability of Carbon Capture, Utilization, and Sequestration ("CCUS") potential across the Company's owned and operated infrastructure footprint through its previously announced partnership with the University of Oklahoma. Additionally, SandRidge maintains its commitment to not engage in the routine flaring of produced natural gas.

Year End 2021 Estimated Proved Reserves

Proved reserves increased from 36.9 MMBoe at December 31, 2020 to 71.3 MMBoe at December 31, 2021, primarily as a result of positive revisions of 43.3 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, reduction in expenses, improved realizations and other improvements, 2021 well reactivation program and purchases of 1.4 MMBoe of proved reserves. The Company also recorded 2021 production totaling 6.8 MMBoe and a decrease of 3.6 MMBoe primarily due to the sale of NPB assets.