Form 8-K |
SANDRIDGE ENERGY, INC. | ||||
(Exact name of registrant as specified in its charter) |
Delaware (State or Other Jurisdiction of Incorporation or Organization) | 1-33784 (Commission File Number) | 20-8084793 (I.R.S. Employer Identification No.) | |
123 Robert S. Kerr Avenue Oklahoma City, Oklahoma (Address of Principal Executive Offices) | 73102 (Zip Code) | ||
99.1 | Pro Forma Financial Information. Unaudited Pro Forma Condensed Statement of Operations for the nine months ended September 30, 2014, Unaudited Pro Forma Condensed Statement of Operations for the year ended December 31, 2013 and related notes showing the pro forma effects of the Permian Sale, the Senior Notes Redemption and the Gulf Sale. |
SANDRIDGE ENERGY, INC. | |||
(Registrant) | |||
January 8, 2015 | By: /s/ Eddie M. LeBlanc | ||
Eddie M. LeBlanc | |||
Executive Vice President and Chief Financial Officer |
No. | Description | |
99.1 | Pro Forma Financial Information. Unaudited Pro Forma Condensed Statement of Operations for the nine months ended September 30, 2014, Unaudited Pro Forma Condensed Statement of Operations for the year ended December 31, 2013 and related notes showing the pro forma effects of the Permian Sale, the Senior Notes Redemption and the Gulf Sale. |
• | Sale of Permian Properties. On February 26, 2013, SandRidge sold its oil and natural gas properties located in the Permian Basin area of west Texas other than those associated with the SandRidge Permian Trust (the "Permian Properties") to Sheridan Holding Company II, LLC for $2.6 billion in cash, net of post-closing adjustments (the "Permian Sale"). |
• | Redemption of Senior Notes. On March 28, 2013, SandRidge redeemed all of its outstanding 9.875% Senior Notes due 2016 and 8.0% Senior Notes due 2018, which had an aggregate principal amount outstanding of $1.1 billion, for a price of 100% of the principal amount, plus a premium as of the redemption date (the "Senior Notes Redemption"). A portion of the proceeds from the Permian Sale was used to fund the Senior Notes Redemption. |
• | Sale of Gulf of Mexico Properties. On February 25, 2014, SandRidge sold certain subsidiaries owning all of SandRidge's Gulf of Mexico and Gulf Coast properties (collectively, the "Gulf Properties") to Fieldwood Energy, LLC for $702.6 million, net of working capital adjustments and post-closing adjustments, and the buyer's assumption of approximately $366.0 million of related asset retirement obligations (the "Gulf Sale"). Under the agreement, SandRidge has agreed to guarantee certain plugging and abandonment obligations associated with the Gulf Properties to the Bureau of Ocean Energy Management for a period of up to one year from the date of closing. As part of the agreement, the buyer has agreed to indemnify SandRidge for any costs it may incur as a result of the guarantee. |
SandRidge Historical | Gulf Sale Pro Forma Adjustments | SandRidge Pro Forma | |||||||||
(In thousands, except per share amounts) | |||||||||||
Revenues | |||||||||||
Oil, natural gas and NGL | $ | 1,104,835 | $ | (88,900 | ) | (a) | $ | 1,015,935 | |||
Drilling and services | 57,280 | — | 57,280 | ||||||||
Midstream and marketing | 44,706 | (264 | ) | (b) | 44,442 | ||||||
Other | 5,056 | (1,756 | ) | (b) | 3,300 | ||||||
Total revenues | 1,211,877 | (90,920 | ) | 1,120,957 | |||||||
Expenses | |||||||||||
Production | 256,473 | (34,790 | ) | (a) | 221,683 | ||||||
Production taxes | 24,027 | (576 | ) | (a) | 23,451 | ||||||
Cost of sales | 38,942 | — | 38,942 | ||||||||
Midstream and marketing | 40,659 | — | 40,659 | ||||||||
Depreciation and depletion — oil and natural gas | 325,021 | (24,233 | ) | (c) | 300,788 | ||||||
Depreciation and amortization — other | 45,350 | (70 | ) | (b) | 45,280 | ||||||
Accretion of asset retirement obligations | 7,927 | (4,707 | ) | (d) | 3,220 | ||||||
Impairment | 167,966 | (164,779 | ) | (e) | 3,187 | ||||||
General and administrative | 86,115 | (1,853 | ) | (b) | 84,262 | ||||||
Employee termination benefits | 8,927 | — | 8,927 | ||||||||
Gain on derivative contracts | (4,792 | ) | — | (4,792 | ) | ||||||
Gain on sale of assets | (978 | ) | — | (978 | ) | ||||||
Total expenses | 995,637 | (231,008 | ) | 764,629 | |||||||
Income from operations | 216,240 | 140,088 | 356,328 | ||||||||
Other income (expense) | |||||||||||
Interest expense | (183,689 | ) | (146 | ) | (b) | (183,835 | ) | ||||
Other income, net | 3,159 | 399 | (b) | 3,558 | |||||||
Total other expense | (180,530 | ) | 253 | (180,277 | ) | ||||||
Income before income taxes | 35,710 | 140,341 | 176,051 | ||||||||
Income tax benefit | (2,131 | ) | — | (f) | (2,131 | ) | |||||
Net income | 37,841 | 140,341 | 178,182 | ||||||||
Less: net income attributable to noncontrolling interest | 49,733 | — | 49,733 | ||||||||
Net (loss) income attributable to SandRidge Energy, Inc. | (11,892 | ) | 140,341 | 128,449 | |||||||
Preferred stock dividends | 39,144 | — | 39,144 | ||||||||
(Loss applicable) income available to SandRidge Energy, Inc. common stockholders | $ | (51,036 | ) | $ | 140,341 | $ | 89,305 | ||||
(Loss) income per share | |||||||||||
Basic | $ | (0.11 | ) | $ | 0.18 | ||||||
Diluted | $ | (0.11 | ) | $ | 0.18 | ||||||
Weighted average number of SandRidge Energy, Inc. common shares outstanding | |||||||||||
Basic | 485,194 | 485,194 | |||||||||
Diluted | 485,194 | 2,797 | (g) | 487,991 |
SandRidge Historical | Permian Sale and Senior Notes Redemption Pro Forma Adjustments | Gulf Sale Pro Forma Adjustments | SandRidge Pro Forma | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Revenues | |||||||||||||||
Oil, natural gas and NGL | $ | 1,820,278 | $ | (68,027 | ) | (a) | $ | (613,530 | ) | (a) | $ | 1,138,721 | |||
Drilling and services | 66,586 | — | — | 66,586 | |||||||||||
Midstream and marketing | 58,304 | — | (2,192 | ) | (b) | 56,112 | |||||||||
Construction contract | 23,349 | — | — | 23,349 | |||||||||||
Other | 14,871 | — | (11,514 | ) | (b) | 3,357 | |||||||||
Total revenues | 1,983,388 | (68,027 | ) | (627,236 | ) | 1,288,125 | |||||||||
Expenses | |||||||||||||||
Production | 516,427 | (14,370 | ) | (a) | (242,285 | ) | (a) | 259,772 | |||||||
Production taxes | 32,292 | (3,084 | ) | (a) | (3,252 | ) | (a) | 25,956 | |||||||
Cost of sales | 57,118 | — | — | 57,118 | |||||||||||
Midstream and marketing | 53,644 | — | (4 | ) | (b) | 53,640 | |||||||||
Construction contract | 23,349 | — | — | 23,349 | |||||||||||
Depreciation and depletion — oil and natural gas | 567,732 | (33,594 | ) | (c) | (181,496 | ) | (c) | 352,642 | |||||||
Depreciation and amortization — other | 62,136 | — | (446 | ) | (b) | 61,690 | |||||||||
Accretion of asset retirement obligations | 36,777 | (184 | ) | (d) | (33,067 | ) | (d) | 3,526 | |||||||
Impairment | 26,280 | — | — | (e) | 26,280 | ||||||||||
General and administrative | 207,920 | — | (45,767 | ) | (b) | 162,153 | |||||||||
Employee termination benefits | 122,505 | — | — | 122,505 | |||||||||||
Loss on derivative contracts | 47,123 | — | — | 47,123 | |||||||||||
Loss on sale of assets | 399,086 | (398,891 | ) | (h) | 309 | (b) | 504 | ||||||||
Total expenses | 2,152,389 | (450,123 | ) | (506,008 | ) | 1,196,258 | |||||||||
(Loss) income from operations | (169,001 | ) | 382,096 | (121,228 | ) | 91,867 | |||||||||
Other income (expense) | |||||||||||||||
Interest expense | (270,234 | ) | 24,540 | (i) | (921 | ) | (b) | (246,615 | ) | ||||||
Loss on extinguishment of debt | (82,005 | ) | 82,005 | (i) | — | — | |||||||||
Other income, net | 12,445 | — | (104 | ) | (b) | 12,341 | |||||||||
Total other expense | (339,794 | ) | 106,545 | (1,025 | ) | (234,274 | ) | ||||||||
Loss before income taxes | (508,795 | ) | 488,641 | (122,253 | ) | (142,407 | ) | ||||||||
Income tax expense (benefit) | 5,684 | (6,991 | ) | (f) | — | (f) | (1,307 | ) | |||||||
Net loss | (514,479 | ) | 495,632 | (122,253 | ) | (141,100 | ) | ||||||||
Less: net income attributable to noncontrolling interest | 39,410 | 71,705 | (h) | — | 111,115 | ||||||||||
Net loss attributable to SandRidge Energy, Inc. | (553,889 | ) | 423,927 | (122,253 | ) | (252,215 | ) | ||||||||
Preferred stock dividends | 55,525 | — | — | 55,525 | |||||||||||
Loss applicable to SandRidge Energy, Inc. common stockholders | $ | (609,414 | ) | $ | 423,927 | $ | (122,253 | ) | $ | (307,740 | ) | ||||
Loss per share | |||||||||||||||
Basic | $ | (1.27 | ) | $ | (0.64 | ) | |||||||||
Diluted | $ | (1.27 | ) | $ | (0.64 | ) | |||||||||
Weighted average number of SandRidge Energy, Inc. common shares outstanding | |||||||||||||||
Basic | 481,148 | 481,148 | |||||||||||||
Diluted | 481,148 | 481,148 |
Note 1. | Basis of Presentation |
(a) | Adjustment to reduce oil and natural gas sales, production expense and production tax expense for amounts attributable to the Permian Properties and Gulf Properties during the nine months ended September 30, 2014 and year ended December 31, 2013. |
(b) | Adjustment to eliminate remaining revenues and expenses associated with the Gulf Properties for the nine months ended September 30, 2014 and year ended December 31, 2013. |
(c) | Adjustment to reduce depletion expense under the full cost method of accounting for oil and natural gas properties. The pro forma depletion adjustment for the nine months ended September 30, 2014 and year ended December 31, 2013 for the Permian Sale and Gulf Sale utilizes an average depletion rate of $15.58 and $15.63 per Boe, respectively. |
(d) | Adjustment to reduce accretion expense for amounts attributable to asset retirement obligations associated with the Permian Properties and Gulf Properties during the nine months ended September 30, 2014 and year ended December 31, 2013. |
(e) | SandRidge estimates it would not have had an impairment from full cost ceiling limitation for the nine months ended September 30, 2014 and would have had an impairment of approximately $503.9 million for the year ended December 31, 2013. Due to the non-recurring nature of these impairments, an adjustment has been included to eliminate the impairment for the nine months ended September 30, 2014 and no adjustment has been reflected to include an impairment for the year ended December 31, 2013. |
(f) | Adjustment to eliminate the increase in the valuation allowance related to an increase in SandRidge's net deferred tax asset resulting from the Permian Sale due to its non-recurring nature for the year ended December 31, 2013. No adjustment for income tax expense attributable to net revenues generated by the Permian Properties or the Gulf Properties during the nine months ended September 30, 2014 or year ended December 31, 2013 has been reflected as the effective tax rate is deemed to be 0% as a result of SandRidge's full valuation allowance on its net deferred tax asset. |
(g) | Adjustment to the weighted average number of common shares outstanding-diluted based on pro forma income available to SandRidge Energy, Inc. common stockholders. |
(h) | Adjustment to eliminate the loss on the Permian Sale, including the portion attributable to noncontrolling interest, due to its non-recurring nature. |
(i) | Adjustment to reduce interest expense for amounts attributable to the Senior Notes Redemption. Additionally, reflects adjustment to eliminate the loss on extinguishment of debt during the year ended December 31, 2013 due to its non-recurring nature. |