SANDRIDGE ENERGY: Administration Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (Type 10-Q)


The next dialogue and evaluation are meant to assist the reader perceive our enterprise, monetary situation, outcomes of operations, liquidity and capital sources. This dialogue and evaluation must be learn together with the accompanying unaudited condensed consolidated monetary statements and associated notes included on this quarterly report, in addition to our audited consolidated monetary statements and associated notes included in Type 10-Ok 2020. Our dialogue and evaluation give attention to the next matters:


•Consolidated Outcomes of Operations;
•Liquidity and Capital Sources; and
•Essential Accounting Insurance policies and Estimates.

Monetary data referring to the three and 6 month durations ended
June 30, 2021, and 2020, mentioned under, is unaudited. In administration’s opinion, this data accommodates all changes, which consist solely of regular recurring changes, until in any other case indicated, essential to pretty current the accompanying unaudited condensed consolidated monetary statements. The outcomes of operations for the interim durations aren’t essentially consultant of the outcomes of operations for the complete 12 months.


We’re an impartial oil and gasoline firm that primarily focuses on acquisition, growth and manufacturing actions within the we Mid-Continent. Previous to February 5, 2021, we held belongings within the North park basin of Colorado, which had been offered of their entirety.

The graph under reveals the manufacturing by product for the finished three and 6 month durations. June 30, 2021 and 2020:

                     [[Image Removed: sd-20210630_g1.jpg]]

(1) For the three months ended June 30, 2021, there was no manufacturing of NPB oil because of the sale. For the previous six months June 30, 2021, North park basin
had 67 MBoe of oil manufacturing.


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Desk of contents (2) For the three and 6 months ended June 30, 2020, North park basin had 222 MBoe and 550 MBoe, respectively, of oil manufacturing.

Whole manufacturing for the finished three-month durations June 30, 2021 and June 30, 2020 consisted of roughly 13.1% petroleum, 51.5% pure gasoline and 35.4% NGL, in comparison with 24.2% petroleum, 44.1% pure gasoline and 31.7% NGL , respectively.

Whole manufacturing for the finished six-month durations June 30, 2021 and June 30, 2020
consisted of roughly 15.3% petroleum, 51.1% pure gasoline and 33.6% NGLs, in comparison with 25.5% petroleum, 43.7% pure gasoline and 30.8% NGL , respectively.

Whole Mid-Continent manufacturing for the finished three and 6 month durations
June 30, 2021 and 2020 consisted of the next:

                      Three Months Ended June 30,                  Six Months Ended June 30,
                           2021                  2020                  2021                 2020
Oil                                 13.1  %      15.4  %                       13.5  %      15.6  %
NGL                                 35.4  %      35.3  %                       34.3  %      34.8  %
Pure gasoline                         51.5  %      49.3  %                       52.2  %      49.6  %
Whole                              100.0  %     100.0  %                      100.0  %     100.0  %

Latest Occasions

•In August 2021, our Board of Administrators (the “Board”) has authorized the initiation of a share buyback program (the “Program” authorizing us to buy as much as a complete of $ 25.0 million of our bizarre shares ranging from August 16, 2021. This system complies with rule 10b-18 of the Trade Act. Topic to relevant guidelines and rules, redemptions underneath the Program could also be made sometimes in open markets at our discretion and in accordance with the Protected Harbor provisions, or in privately traded transactions. The Program doesn’t require the acquisition of a decided variety of shares and might be modified or interrupted by the Board at any time.

•On July 26, 2021, we’ve entered into an modification (the “First Modification”) to the New Credit score Facility. In accordance with the First Modification, we will likely be approved to grant liens securing our obligations underneath swap agreements with sure counterparties to the extent that such swap agreements are approved underneath the credit score settlement and authorized by our board of administrators. • In reference to the resignation of our former managing director (“CEO”), the board appointed Grayson Pranin as an efficient President and CEO July 16, 2021 and also will retain his function as Chief Working Officer. that of Mr. Pranin compensation will likely be decided later. Mr. Pranin, 41, has served as Senior Vice President and Chief Working Officer since
March 3, 2021.

•On July 9, 2021, Carl F. Giesler, Jr. tendered his resignation from his positions as CEO, President and member of the Board of Administrators of the Firm, efficient July 16, 2021 with a view to pursue one other profession alternative. Mr. Giesler has not resigned following a disagreement with the Firm on any matter referring to the operations, insurance policies or practices of the Firm.

•On April 22, 2021, we introduced the acquisition of the entire overriding royalty rights belongings of SandRidge Mississippian Belief I (confidence “). The gross buy worth is $ 4.9 million (report $ 3.6 million, given our 26.9% curiosity within the Belief).


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Desk of contents • Throughout the second quarter of 2021, we started to carry again into manufacturing wells that had been beforehand diminished resulting from decrease uncooked materials costs within the first half of 2020 and, in lots of instances, to enhance their manufacturing. manufacturing potential via modest capital enhancements. Focused efforts to enhance working prices, in addition to the rebound in commodity costs from their 2020 lows, have bolstered the economics of those effectively reactivation initiatives. Excessive charges of return and low execution danger help our perception that these initiatives signify an environment friendly use of capital. From June 30, 2021, we introduced 49 wells again into manufacturing, leading to a mean further manufacturing of 0.8 MBoed within the first half of 2021. Roughly 30 of those wells required reconditioning to return to service and represented capital expenditures of $ 0.6 million and $ 0.8 million expenditure repackaging. The remainder of the wells required little or no expense to be reactivated.

• Following the sale of NPB’s belongings within the first quarter of 2021, we’re not engaged in routine flaring of produced pure gasoline.


All through 2021, we’ve centered and can proceed to give attention to maximizing free money move in 2021 via a mixture of value containment measures and the continued train of economic self-discipline and accountability. prudent allocation of capital, which incorporates limiting our funding initiatives to initiatives that we imagine will present charges of return within the present commodity worth surroundings. In consequence, our deliberate capital spending for 2021 will seemingly be of an analogous magnitude, however probably a rise to 2020 ranges. Given this deliberate stage of capital spending, our manufacturing of oil, pure gasoline and gasoline. LGN will seemingly decline in 2021. Nonetheless, wells returned to service through the interval, in addition to potential future effectively reactivations, might partially reverse the pure decline in our baseline manufacturing. We could think about increasing our capital program additional after assessing all components, together with commodity costs. We may even proceed our seek for acquisitions and enterprise combos that supply excessive margin properties with engaging returns at present commodity costs.

The COVID-19 pandemic has diminished world financial exercise and negatively impacted power demand over the previous twelve months. Demand for oil and pure gasoline is slowly returning to pre-pandemic ranges as COVID-19 vaccination charges and financial exercise have elevated. Nonetheless, the unfold of COVID-19 variants and the effectiveness of vaccines in opposition to these variants are necessary danger components for a full and sustained restoration. If at present out there vaccines aren’t efficient in opposition to COVID-19 or its different variants, we should proceed to depend on mobility and exercise restrictions to mitigate the unfold, which can result in an extended and longer return of the illness. request for a number of the merchandise.

Moreover, we’ve carried out a number of further initiatives to maximise free money move, our liquidity place and finally obtain better shareholder worth. These initiatives included reductions in personnel and non-personnel prices, in addition to the sale of our head workplace in 2020. Earlier than
February 5, 2021, we held belongings within the North park basin, which had been offered of their entirety.

Consolidated working outcomes

The vast majority of our consolidated revenues and money flows are generated from the manufacturing and sale of petroleum, pure gasoline and NGLs. Our revenues, profitability and future progress rely largely on the going costs obtained for our manufacturing, the quantity of oil, pure gasoline and NGLs we produce, and our skill to search out, develop and economically produce our merchandise. reservations. The costs of oil, pure gasoline and NGLs fluctuate broadly and are troublesome to foretell. To supply data on the overall evolution of costs, the common New York Inventory Trade The “NYMEX” costs for oil and pure gasoline are proven within the desk under:

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