SandRidge Energy (SD) 10-Q 6 Aug 09 2009 Q2 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
In Billions, except Share data	6 Months Ended Jun. 30, 2009	Jul. 31, 2009	Mar. 31, 2009
Document and Company Information [Abstract]
Entity Registrant Name	SANDRIDGE ENERGY, INC.
Entity Central Index Key	0001349436
Document Type	10-Q
Document Period End Date	2009-06-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$8
Entity Common Stock, Shares Outstanding (actual number of shares)		183,546,780

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Thousands	Jun. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$621	$636
Accounts receivable, net:
Trade	73,125	102,746
Related parties	201	6,327
Derivative contracts	207,342	201,111
Inventories	3,556	3,686
Costs in excess of billings	16,449	0
Other current assets	20,164	41,407
Total current assets	321,458	355,913
Natural gas and crude oil properties, using full cost method of accounting
Proved	4,996,188	4,676,072
Unproved	225,369	215,698
Less: accumulated depreciation, depletion and impairment	(3,765,118)	(2,369,840)
Natural gas and crude oil properties, using full cost method of accounting, net	1,456,439	2,521,930
Other property, plant and equipment, net	464,463	653,629
Derivative contracts	35,709	45,537
Investments	7,588	6,088
Restricted deposits	32,860	32,843
Other assets	45,799	39,118
Total assets	2,364,316	3,655,058
Current liabilities:
Current maturities of long-term debt	15,380	16,532
Accounts payable and accrued expenses:
Trade	185,452	366,337
Related parties	176	230
Derivative contracts	6,238	5,106
Asset retirement obligation	128	275
Billings in excess of costs incurred	0	14,144
Total current liabilities	207,374	402,624
Long-term debt	2,146,615	2,358,784
Other long-term obligations	11,967	11,963
Derivative contracts	733	3,639
Asset retirement obligation	89,421	84,497
Total liabilities	2,456,110	2,861,507
SandRidge Energy, Inc. stockholders' equity:
Preferred stock, $0.001 par value, 50,000 shares authorized: 8.5% Convertible perpetual preferred stock; 2,650 shares issued and outstanding at June 30, 2009 and no shares issued and outstanding in 2008; aggregate liquidation preference of $265,000 at June 30, 2009	3	0
Common stock, $0.001 par value, 400,000 shares authorized; 183,254 issued and 181,856 outstanding at June 30, 2009 and 167,372 issued and 166,046 outstanding at December 31, 2008	178	163
Additional paid-in capital	2,532,180	2,170,986
Treasury stock, at cost	(19,854)	(19,332)
Accumulated deficit	(2,604,327)	(1,358,296)
Total SandRidge Energy, Inc. stockholders' (deficit) equity	(91,820)	793,521
Noncontrolling interest	26	30
Total (deficit) equity	(91,794)	793,551
Total liabilities and equity	$2,364,316	$3,655,058

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands	Jun. 30, 2009	Dec. 31, 2008
Preferred stock, par value	0.001	0.001
Preferred stock, shares authorized	50,000	50,000
8.5% Convertible perpetual preferred stock, shares issued	2,650	0
8.5% Convertible perpetual preferred stock, shares outstanding	2,650	0
8.5% Convertible perpetual preferred stock, aggregate liquidation preference	$265,000	$0
Common stock, par value	0.001	0.001
Common stock, shares authorized	400,000	400,000
Common stock, shares issued	183,254	167,372
Common stock, shares outstanding	181,856	166,046

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues:
Natural gas and crude oil	$103,039	$292,134	$224,280	$497,621
Drilling and services	5,176	11,957	11,571	24,291
Midstream and marketing	19,642	69,488	45,598	115,897
Other	6,242	4,471	11,663	9,327
Total revenues	134,099	378,050	293,112	647,136
Expenses:
Production	41,450	40,254	87,029	74,442
Production taxes	593	13,519	2,084	22,739
Drilling and services	6,415	5,066	12,021	12,235
Midstream and marketing	18,450	64,733	41,812	105,151
Depreciation, depletion and amortization-natural gas and crude oil	34,350	72,256	94,443	137,332
Depreciation, depletion and amortization-other	14,034	15,780	26,760	33,745
Impairment	0	0	1,304,418	0
General and administrative	23,632	26,203	52,117	47,197
Loss (gain) on derivative contracts	18,992	159,768	(187,655)	296,612
Loss (gain) on sale of assets	26,170	(7,734)	26,350	(7,711)
Total expenses	184,086	389,845	1,459,379	721,742
Loss from operations	(49,987)	(11,795)	(1,166,267)	(74,606)
Other income (expense):
Interest income	188	1,333	199	2,145
Interest expense	(42,419)	(22,223)	(83,167)	(47,395)
Income from equity investments	200	556	434	1,415
Other income, net	483	955	1,243	939
Total other (expense) income	(41,548)	(19,379)	(81,291)	(42,896)
Loss before income tax benefit	(91,535)	(31,174)	(1,247,558)	(117,502)
Income tax benefit	(365)	(10,847)	(1,534)	(41,385)
Net loss	(91,170)	(20,327)	(1,246,024)	(76,117)
Less: net income attributable to noncontrolling interest	4	16	7	851
Net loss attributable to SandRidge Energy, Inc. common stockholders	(91,174)	(20,343)	(1,246,031)	(76,968)
Preferred stock dividends and accretion	0	6,650	0	16,232
Loss applicable to SandRidge Energy, Inc. common stockholders	($91,174)	($26,993)	($1,246,031)	($93,200)
Basic and diluted loss per share applicable to SandRidge Energy, Inc. common stockholders	-0.52	-0.17	-7.38	-0.63
Weighted average number of SandRidge Energy, Inc. common shares outstanding:
Basic	174,154	155,204	168,767	148,124
Diluted	174,154	155,204	168,767	148,124

2_Condensed Consolidated Statem

Condensed Consolidated Statement of Changes in Equity (USD $)
In Thousands	3 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2009	Dec. 31, 2008
Beginning Balance		$793,551
Distributions to noncontrolling interest owners		(11)
Issuance of 8.5% convertible perpetual preferred stock		243,289
Issuance of common stock		107,699
Purchase of treasury stock		(522)
Stock-based compensation		12,389
Stock-based compensation excess tax benefit		(2,165)
Net (loss) income	(91,170)	(1,246,024)
Ending Balance	(91,794)	(91,794)	793,551
Common Stock
Beginning Balance		163
Beginning Balance, Shares		166,046
Issuance of common stock		15
Issuance of common stock, shares		14,480
Issuance of restricted stock awards, net of cancellations, Shares		1,330
Ending Balance	178	178	163
Ending Balance, Shares	181,856	181,856	166,046
8.5% Convertible Perpetual Preferred stock
Issuance of 8.5% convertible perpetual preferred stock		3
Issuance of 8.5% convertible perpetual preferred stock, Shares		2,650
Ending Balance	3	3
Ending Balance, Shares	2,650	2,650
Additional Paid-in Capital
Beginning Balance		2,170,986
Issuance of 8.5% convertible perpetual preferred stock		243,286
Issuance of common stock		107,684
Stock-based compensation		12,389
Stock-based compensation excess tax benefit		(2,165)
Ending Balance	2,532,180	2,532,180	2,170,986
Treasury Stock
Beginning Balance		(19,332)
Purchase of treasury stock		(522)
Ending Balance	(19,854)	(19,854)	(19,332)
Accumulated Deficit
Beginning Balance		(1,358,296)
Net (loss) income		(1,246,031)
Ending Balance	(2,604,327)	(2,604,327)	(1,358,296)
Noncontrolling Interest
Beginning Balance		30
Distributions to noncontrolling interest owners		(11)
Net (loss) income		7
Ending Balance	$26	$26	$30

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	($1,246,024)	($76,117)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for doubtful accounts	62	0
Depreciation, depletion and amortization	121,203	171,077
Impairment	1,304,418	0
Debt costs amortization	3,677	2,445
Deferred income taxes	4	(42,338)
Unrealized loss on derivative contracts	1,823	235,489
Loss (gain) on sale of assets	26,350	(7,711)
Investment income - restricted deposits	(17)	(243)
Income from equity investments	(434)	(1,415)
Stock-based compensation	10,368	7,260
Stock-based compensation excess tax benefit	(2,165)	0
Changes in operating assets and liabilities	(77,283)	8,387
Net cash provided by operating activities	141,982	296,834
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant and equipment	(524,266)	(934,301)
Proceeds from sale of assets	253,968	153,191
Loans to unconsolidated investees	0	(4,000)
Fundings of restricted deposits	0	(781)
Net cash used in investing activities	(270,298)	(785,891)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings	1,431,765	1,408,000
Repayments of borrowings	(1,645,278)	(665,615)
Dividends paid-preferred	0	(17,552)
Noncontrolling interest distributions	(11)	(4,059)
Proceeds from issuance of 8.5% convertible perpetual preferred stock	243,289	0
Proceeds from issuance of common stock	107,699	0
Purchase of treasury stock	(522)	(1,908)
Debt issuance costs	(8,641)	(17,056)
Net cash provided by financing activities	128,301	701,810
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(15)	212,753
CASH AND CASH EQUIVALENTS, beginning of period	636	63,135
CASH AND CASH EQUIVALENTS, end of period	621	275,888
Supplemental Disclosure of Noncash Investing and Financing Activities:
Change in accrued capital expenditures	(79,782)	0
Accretion on redeemable convertible preferred stock	$0	$7,636

Basis of Presentation

Basis of Presentation
	6 Months Ended Jun. 30, 2009 USD / shares
Basis of Presentation [Abstract]
Basis of Presentation	1. Basis of Presentation Nature of Business.SandRidge Energy, Inc. and its subsidiaries (collectively, the Company or SandRidge) is an independent natural gas and crude oil company concentrating on exploration, development and production activities. The Company also owns and operates natural gas gathering and treating facilities and CO2 treating and transportation facilities and has marketing and tertiary oil recovery operations. In addition, Lariat Services, Inc. (Lariat), a wholly owned subsidiary, owns and operates drilling rigs and a related oil field services business. The Companys primary exploration, development and production areas are concentrated in West Texas. The Company also operates interests in the Mid-Continent, the Cotton Valley Trend in East Texas, the Gulf Coast and the Gulf of Mexico. Interim Financial Statements.The accompanying condensed consolidated financial statements as of December31, 2008 have been derived from the audited financial statements contained in the 2008 Form10-K. The unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with the accounting policies stated in the audited consolidated financial statements contained in the 2008 Form10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the information in the Companys unaudited condensed consolidated financial statements have been included. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the 2008 Form10-K.

Significant Accounting Policies

Significant Accounting Policies
	6 Months Ended Jun. 30, 2009 USD / shares
Significant Accounting Policies [Abstract]
Significant Accounting Policies	2. Significant Accounting Policies For a description of the Companys significant accounting policies, refer to Note1 of the consolidated financial statements included in the 2008 Form10-K. Reclassifications.Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Recent Accounting Pronouncements.Effective January1, 2009, the Company implemented Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements, for certain of its nonfinancial liabilities, in accordance with Staff Position FAS157-2, Effective Date of FASB Statement No.157 (FSP157-2), which delayed the effective date of SFASNo.157 to fiscal years beginning after November15, 2008 for all nonfinancial assets and liabilities except those recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually. This implementation did not have a material impact on the Companys financial position or results of operations. Effective January1, 2009, the Company implemented SFASNo.160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of Accounting Research BulletinNo.51, which established accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFASNo.160 also establishes disclosure requirements to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The implementation of SFASNo.160 resulted in changes to the presentation for noncontrolling interests and did not have a material impact on the Companys results of operations and financial condition. All historical periods presented in the condensed consolidated financial statements reflect these changes to the presentation for noncontrolling interests. See Note15. Effective January1, 2009, the Company implemented SFASNo.161, Disclosures about Derivative Instruments and Hedging Activities, which changed disclosure requirements for derivative instruments and hedging activities. SFASNo.161 requires enhanced disclosure, including qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The implementation of SFASNo.161 did not have a material impact on the Companys financial position or results of operations. See Note10. Effective for the period ended June30, 2009, the Company implemented Financial Accounting Standards Board (FASB) Staff Position FAS107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS107-1 and APB 28-1), which amends SFASNo.107, Disclosures about Fair Value of Financial Instruments, and Accounting Principles Board Opinion 28, Interim Financial Re

Fair Value Measurements

Fair Value Measurements
	6 Months Ended Jun. 30, 2009 USD / shares
Fair Value Measurements [Abstract]
Fair Value Measurements	3. Fair Value Measurements Effective January1, 2008, the Company implemented SFASNo.157 for its financial assets and liabilities measured on a recurring basis. SFASNo.157 applies to all assets and liabilities that are measured and reported on a fair value basis. Effective January1, 2009, the Company implemented SFASNo.157 for certain nonfinancial liabilities based on FSP157-2, which delayed the effective date of SFASNo.157 by one year for certain nonfinancial assets and liabilities, with no material impact to the Companys financial position or results of operations as a result of this implementation. As defined in SFASNo.157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFASNo.157 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity). As required by SFASNo.157, assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. The Companys assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for the Companys financial assets and liabilities, the associated credit risk and other factors as required under SFASNo.157. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Fair Value of Derivative Contracts As required by SFASNo.157, the Company has classified its derivative contracts into one of three levels based upon the data relied upon to determine the fair value. The fair values of the Companys natural gas and crude oil swaps and interest rate swaps are based upon quotes obtained from counterparties to the derivative contracts. The Company reviews other readily available market prices for its derivative contracts as there is an active market for these contracts. However, the Company does not have access to the specific valuation models used by its counterparties or other market participants. Included in these models are discount factors that

Property, Plant and Equipment

Property, Plant and Equipment
	6 Months Ended Jun. 30, 2009 USD / shares
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	4. Property, Plant and Equipment Property, plant and equipment consists of the following (in thousands): June30, December31, 2009 2008 Natural gas and crude oil properties: Proved $ 4,996,188 $ 4,676,072 Unproved 225,369 215,698 Total natural gas and crude oil properties 5,221,557 4,891,770 Less accumulated depreciation, depletion and impairment(1) (3,765,118 ) (2,369,840 ) Net natural gas and crude oil properties capitalized costs 1,456,439 2,521,930 Land 13,937 11,250 Non natural gas and crude oil equipment(2) 563,358 764,792 Buildings and structures 85,066 71,859 Total 662,361 847,901 Less accumulated depreciation, depletion and amortization (197,898 ) (194,272 ) Net capitalized costs 464,463 653,629 Total property, plant and equipment, net $ 1,920,902 $ 3,175,559 (1) Includes cumulative full cost ceiling limitation impairment charges of $3,159.4million and $1,855.0million at June30, 2009 and December31, 2008, respectively. (2) The amount of capitalized interest included in the above non natural gas and crude oil equipment balance at both June30, 2009 and December31, 2008 was approximately $3.8million. In 2009, the asset lives of certain drilling, oil field services, midstream and other assets were changed to align with industry average lives for similar assets. Sale of Midstream Assets.In June 2009, the Company completed the sale of its gathering and compression assets located in the Pion Field, part of the West Texas Overthrust (WTO) located in Pecos and Terrell counties, Texas. Net proceeds to the Company were approximately $197.5million. The sale resulted in a loss of approximately $26.5million. In conjunction with the sale, the Company entered into a gas gathering agreement and an operations and maintenance agreement. Under the gas gathering agreement, the Company has dedicated its Pion Field acreage for priority gathering services for a period of twenty years and the Company will pay a fee that was negotiated at arms length for such services. Pursuant to the operations and maintenance agreement, the Company will operate and maintain the gathering system assets sold for a period of twenty years unless the Company or the buyer of the assets chooses to terminate the agreement. Sale of East Texas Deep Rights.In June 2009, the Company completed the sale of its drilling rights in East Texas below the depth of the Cotton Valley formation for net proceeds of approximately $55.9million, subject to certain post-closing adjustments. The sale of the deep rights was accounted for as an adjustment to the full cost pool with no gain or loss recognized.

Impairment

Impairment
	6 Months Ended Jun. 30, 2009 USD / shares
Impairment [Abstract]
Impairment	5. Impairment Under the full cost method of accounting, the net book value of natural gas and crude oil properties, less related deferred income taxes, may not exceed a calculated ceiling. The ceiling limitation is the discounted estimated after-tax future net revenue from proved natural gas and crude oil properties, excluding future cash outflows associated with settling asset retirement obligations included in the net book value of natural gas and crude oil properties, plus the cost of properties not subject to amortization. In calculating future net revenues, prices and costs used are those as of the end of the appropriate period. These prices are not changed except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts. The Company has entered into various commodity derivative contracts; however, these derivative contracts are not accounted for as cash flow hedges. Accordingly, the effect of these derivative contracts has not been considered in calculating the full cost ceiling limitation as of June30, 2009. The net book value, less related deferred tax liabilities, is compared to the ceiling limitation on a quarterly and annual basis. Any excess of the net book value, less related deferred taxes, is written off as an expense. An expense recorded in one period may not be reversed in a subsequent period even though higher natural gas and crude oil prices may have increased the ceiling limitation in the subsequent period. During the first quarter of 2009, the Company reduced the carrying value of its natural gas and crude oil properties by $1,304.4million due to the full cost ceiling limitation. As the full cost ceiling exceeded the net capitalized costs at June30, 2009, there was no such reduction of the Companys carrying value of its natural gas and crude oil properties during the second quarter of 2009.

Costs in Excess of Billings

Costs in Excess of Billings (Billings in Excess of Costs Incurred)
	6 Months Ended Jun. 30, 2009 USD / shares
Costs in Excess of Billings (Billings in Excess of Costs Incurred) [Abstract]
Costs in Excess of Billings (Billings in Excess of Costs Incurred)	6. Costs in Excess of Billings (Billings in Excess of Costs Incurred) In June 2008, the Company entered into an agreement with a subsidiary of Occidental Petroleum Corporation (Occidental) to construct a CO2 treating plant (the Century Plant) and associated compression and pipeline facilities for $800.0million. The Company will construct the Century Plant and Occidental will pay a minimum of 100% of the contract price, plus any subsequent agreed-upon revisions, to the Company through periodic cost reimbursements based upon the percentage of the project completed by the Company. Upon start-up, the Century Plant, located in Pecos County, Texas, will be owned and operated by Occidental for the purpose of separating and removing CO2 from natural gas delivered by the Company. Pursuant to a thirty-year treating agreement executed simultaneously with the construction agreement, Occidental will remove CO2 from the Companys delivered production volumes. The Company will retain all methane gas from the Century Plant. The Company accounts for construction of the Century Plant using the completed-contract method, under which contract revenues and costs are recognized when work under the contract is completed or substantially completed. In the interim, costs incurred on and billings related to contracts in process are accumulated on the balance sheet. Provisions for a contract loss are recognized when it is determined that a loss will be incurred. Costs in excess of billings (billings in excess of costs incurred) were $16.4million and ($14.1)million and were reported as a current asset and current liability in the condensed consolidated balance sheets at June30, 2009 and December31, 2008, respectively.

Asset Retirement Obligation

Asset Retirement Obligation
	6 Months Ended Jun. 30, 2009 USD / shares
Asset Retirement Obligation [Abstract]
Asset Retirement Obligation	7. Asset Retirement Obligation A reconciliation of the beginning and ending aggregate carrying amounts of the asset retirement obligation for the period from December31, 2008 to June30, 2009 is as follows (in thousands): Asset retirement obligation, December31, 2008 $ 84,772 Liability incurred upon acquiring and drilling wells 1,409 Revisions in estimated cash flows (162 ) Liability settled in current period Accretion of discount expense 3,530 Asset retirement obligation, June30, 2009 89,549 Less: Current portion 128 Asset retirement obligation, net of current $ 89,421

Long Term Debt

Long Term Debt
	6 Months Ended Jun. 30, 2009 USD / shares
Long-Term Debt [Abstract]
Long-Term Debt	8. Long-Term Debt Long-term debt consists of the following (in thousands): June30, December31, 2009 2008 Senior credit facility $ 18,000 $ 573,457 Other notes payable: Drilling rig fleet and related crude oil field services equipment 25,360 33,030 Mortgage 18,393 18,829 Senior Floating Rate Notes due 2014 350,000 350,000 8.625%Senior Notes due 2015 650,000 650,000 9.875%Senior Notes due 2016, net of $15,258 discount 350,242 8.0%Senior Notes due 2018 750,000 750,000 Total debt 2,161,995 2,375,316 Less: Current maturities of long-term debt 15,380 16,532 Long-term debt $ 2,146,615 $ 2,358,784 For the three months ended June30, 2009 and 2008, interest payments, net of amounts capitalized, were approximately $65.4million and $25.4million, respectively. For the six months ended June30, 2009 and 2008, interest payments, net of amounts capitalized, were approximately $75.4million and $50.8million, respectively. Senior Credit Facility.The amount the Company can borrow under its senior secured revolving credit facility (the senior credit facility) is limited to a borrowing base, which was $985.4million at June30, 2009. The senior credit facility matures on November21, 2011 and is available to be drawn on and repaid so long as the Company is in compliance with its terms, including certain financial covenants as fully described below. The senior credit facility contains various covenants that limit the ability of the Company and certain of its subsidiaries to grant certain liens; make certain loans and investments; make distributions; redeem stock; redeem or prepay debt; merge or consolidate with or into a third party; or engage in certain asset dispositions, including a sale of all or substantially all of the Companys assets. Additionally, the senior credit facility limits the ability of the Company and certain of its subsidiaries to incur additional indebtedness with certain exceptions, including under the series of senior notes discussed below. The senior credit facility contains financial covenants, including maintaining agreed levels for the (i)ratio of total funded debt to EBITDAX (as defined in the senior credit facility), which may not exceed 4.5:1.0 calculated using the last four completed fiscal quarters, (ii)ratio of EBITDAX to interest expense plus current maturities of long-term debt, which must be at least 2.5:1.0 calculated using the last four completed fiscal quarters, and (iii)ratio of current assets to current liabilities, which must be at least 1.0:1.0. In the current ratio calculation (as defined in the senior credit facility) any amounts available to be drawn under the senior credit facility are included in current assets, and unrealized assets and liabilities resulting from mark-to-market adjustments on the Companys

Other Long Term Obligations

Other Long Term Obligations
	6 Months Ended Jun. 30, 2009 USD / shares
Other Long-Term Obligations [Abstract]
Other Long-Term Obligations	9. Other Long-Term Obligations The Company has recorded a long-term obligation for amounts to be paid under a settlement agreement with Conoco, Inc. entered into in January 2007. The Company agreed to pay approximately $25.0million plus interest, payable in $5.0million increments on April1, 2007, July1, 2008, July1, 2009, July1, 2010 and July1, 2011. The payment to be made on July1, 2009 has been included in accounts payable-trade in the accompanying condensed consolidated balance sheets at June30, 2009 and December31, 2008. The non-current unpaid settlement amount of $10.0million has been included in other long-term obligations in the accompanying condensed consolidated balance sheets at June30, 2009 and December31, 2008.

Derivatives

Derivatives
	6 Months Ended Jun. 30, 2009 USD / shares
Derivatives [Abstract]
Derivatives	10. Derivatives The Companys derivative contracts have not been designated as hedges. The Company records all derivative contracts, which include commodity derivatives and interest rate swaps, at fair value. Changes in derivative contract fair values are recognized in earnings. Cash settlements and valuation gains and losses are included in loss (gain) on derivative contracts for the commodity derivative contracts and in interest expense for the interest rate swaps in the consolidated statements of operations. Commodity derivative contracts are settled on a monthly basis. Settlements on the interest rate swaps occur quarterly. Derivative assets and liabilities arising from the Companys derivative contracts with the same counterparty that provide for net settlement are reported on a net basis in the consolidated balance sheet. Commodity Derivatives.The Company is exposed to commodity price risk, which impacts the predictability of its cash flows related to the sale of natural gas and crude oil and is managed by the Companys use of commodity derivative contracts. These derivative contracts allow the Company to limit its exposure to a portion of its projected natural gas and crude oil sales. None of the Companys derivative contracts may be terminated early as a result of a party having its credit rating downgraded. At June30, 2009 and December31, 2008, the Companys commodity derivative contracts consisted of fixed price swaps and basis swaps, which are described below: Fixed price swaps The Company receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume. Basis swaps The Company receives a payment from the counterparty if the settled price differential is greater than the stated terms of the contract and pays the counterparty if the settled price differential is less than the stated terms of the contract, which guarantees the Company a price differential for natural gas from a specified delivery point. Interest Rate Swaps.The Company is exposed to interest rate risk on its long-term fixed and variable interest rate borrowings. Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes the Company to (i)changes in market interest rates reflected in the fair value of the debt and (ii)the risk that the Company may need to refinance maturing debt with new debt at a higher rate. Variable rate debt, where the interest rate fluctuates, exposes the Company to short-term changes in market interest rates as the Companys interest obligations on these instruments are periodically redetermined based on prevailing market interest rates, primarily LIBOR and the federal funds rate. The Company has entered into two interest rate swap agreements to manage the interest rate risk on a portion of its floating rate debt by effectively fixing the variable interest rate on its Senior Floating Rate Notes. See Note8 for further discussion of the Companys interest rate swaps. Fair Value of Derivatives.The balance sheet classification of assets and liabilities related to derivative

Income Taxes

Income Taxes
	6 Months Ended Jun. 30, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	11. Income Taxes In accordance with GAAP, the Company estimates for each interim reporting period the effective tax rate expected for the full fiscal year and uses that estimated rate in providing income taxes on a current year-to-date basis. The provisions (benefits) for income taxes consisted of the following components for the three and six-month periods ended June 30 (in thousands): Three Months Ended Six Months Ended June30, June30, 2009 2008 2009 2008 Current: Federal $ (50 ) $ $ (2,220 ) $ State (315 ) 945 682 1,024 (365 ) 945 (1,538 ) 1,024 Deferred: Federal (10,749 ) 4 (41,236 ) State (1,043 ) (1,173 ) (11,792 ) 4 (42,409 ) Total benefits $ (365 ) $ (10,847 ) $ (1,534 ) $ (41,385 ) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Deferred tax assets are reduced by a valuation allowance if a determination is made that it is more likely than not that some or all of the deferred assets will not be realized based on the weight of all available evidence. For the year ended December31, 2008, the Company determined it was appropriate to record a full valuation allowance against its net deferred tax asset. For the six-month period ended June30, 2009, the Company recorded a $438.5million increase to the previously established valuation allowance. The increase is primarily a result of not recording a tax benefit for the current period loss before income taxes of $1,247.6million. Internal Revenue Code (IRC) Section382 addresses company ownership changes and specifically limits the utilization of certain tax attributes on an annual basis following an ownership change. The Company has experienced several owner shifts, within the meaning of IRC Section382, since the time of its last ownership change, which occurred in June 2008. Further owner shifts occurring during the three-year period beginning as of June 2008may result in another ownership change. In the event another ownership change occurs, the application of IRC Section382 may limit the amount of tax attributes, including the 2009 projected net operating loss, that the Company can utilize on an annual basis. The Company will continue to closely monitor its ownership activity. No reserves for uncertain income tax positions have been recorded pursuant to FASB Interpretation No.48 Accounting for Uncer

Earnings

Earnings (Loss) Per Share
	6 Months Ended Jun. 30, 2009 USD / shares
Earnings (Loss) Per Share [Abstract]
Earnings (Loss) Per Share	12. Earnings (Loss) Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average shares outstanding during the period, but also include the dilutive effect of awards of restricted stock and outstanding convertible preferred stock. The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share, for the three and six-month periods ended June30, 2009 and 2008 (in thousands): Three Months Ended Six Months Ended June30, June30, 2009 2008 2009 2008 Weighted average basic common shares outstanding 174,154 155,204 168,767 148,124 Effect of dilutive securities: Restricted stock Convertible preferred stock outstanding Weighted average diluted common and potential common shares outstanding 174,154 155,204 168,767 148,124 For the three-month periods ended June30, 2009 and 2008, restricted stock awards covering 2.4million shares and 1.3million shares, respectively, were excluded from the computation of net loss per share because their effect would have been antidilutive. For the six-month periods ended June30, 2009 and 2008, restricted stock awards covering 2.5million shares and 1.3million shares, respectively, were excluded from the computation of net loss per share because their effect would have been antidilutive. In computing diluted earnings per share, the Company evaluated the if-converted method with respect to its outstanding 8.5% convertible perpetual preferred stock for the three and six-month periods ended June30, 2009 and with respect to its then outstanding redeemable convertible preferred stock for the three and six-month periods ended June30, 2008. Under this method, the Company assumes the conversion of the preferred stock to common stock and determines if this is more dilutive than including the preferred stock dividends (paid and unpaid) in the computation of income available to common stockholders. The Company determined the if-converted method is not more dilutive for the three and six-month periods ended June30, 2009 and 2008.

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Jun. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	13. Commitments and Contingencies The Company is a defendant in lawsuits from time to time in the normal course of business. In managements opinion, the Company is not currently involved in any legal proceedings that, individually or in the aggregate, could have a material effect on the financial condition, results of operations or cash flows of the Company.

Redeemable Convertible Preferre

Redeemable Convertible Preferred Stock
	6 Months Ended Jun. 30, 2009 USD / shares
Redeemable Convertible Preferred Stock [Abstract]
Redeemable Convertible Preferred Stock	14. Redeemable Convertible Preferred Stock In November 2006, the Company sold 2,136,667shares of redeemable convertible preferred stock to finance a portion of its acquisition of NEG Oil Gas, LLC. Each holder of redeemable convertible preferred stock was entitled to quarterly cash dividends at the annual rate of 7.75% of the accreted value, or $210 per share, of their redeemable convertible preferred stock. Each share of redeemable convertible preferred stock was initially convertible into ten shares, and ultimately convertible into 10.2shares, of common stock at the option of the holder. A summary of dividends declared and paid on the redeemable convertible preferred stock is as follows (in thousands, except per share data): Dividends Declared Dividend Period per Share Total Payment Date January31, 2007 November 21, 2006 February 1, 2007 $ 3.21 $ 6,859 February 15, 2007 May8, 2007 February 2, 2007 May 1, 2007 3.97 8,550 May 15, 2007 June8, 2007 May 2, 2007 August 1, 2007 4.10 8,956 August 15, 2007 September24, 2007 August 2, 2007 November 1, 2007 4.10 8,956 November15,2007 December16, 2007 November 2, 2007 February 1, 2008 4.10 8,956 February 15, 2008 March7, 2008 February 2, 2008 May 1, 2008 4.01 8,095 (1) May7, 2008 May 2, 2008 May 7, 2008 4.01 501 May 7, 2008 (1) Includes $0.6million of prorated dividends paid to holders of redeemable convertible preferred shares at the time their shares converted to common stock in March 2008. The remaining dividends of $7.5million were paid during May 2008. On March30, 2007, certain holders of the Companys common units (consisting of shares of common stock and a warrant to purchase redeemable convertible preferred stock upon the surrender of common stock) exercised warrants to purchase redeemable convertible preferred stock. The holders converted 526,316shares of common stock into 47,619shares of redeemable convertible preferred stock. During March 2008, holders of 339,823shares of the Companys redeemable convertible preferred stock elected to convert those shares into 3,465,593shares of the Companys common stock. Additionally, during May 2008, the Company converted the remaining outstanding 1,844,464shares of its redeemable convertible preferred stock into 18,810,260shares of its common stock as permitted under the terms of the redeemable convertible preferred stock. These conversions resulted in increases to additional paid-in capital totaling $452.2million, which represents the difference between the par value of the common stock issued and the carrying value of the redeemable convertible shares converted. The Company also recorded charges to retained earnings totaling $7.2million in accelerated accretion expense related to the converted redeemable convertible preferred shares. Prorated dividends totaling $0.5million for th

Equity

Equity
	6 Months Ended Jun. 30, 2009 USD / shares
Equity [Abstract]
Equity	15. Equity Preferred Stock.The following table presents information regarding the Companys preferred stock (in thousands): June30, December31, 2009 2008 Shares authorized 50,000 50,000 Shares outstanding at end of period 2,650 In January 2009, the Company completed a private placement of 2,650,000shares of 8.5% convertible perpetual preferred stock to qualified institutional investors eligible under Rule144A under the Securities Act. The offering included 400,000shares of convertible perpetual preferred stock issued upon the full exercise of the initial purchasers option to cover over-allotments. Net proceeds from the offering were approximately $243.3million after deducting offering expenses of approximately $8.6million. The Company used the net proceeds from the offering to repay outstanding borrowings under the senior credit facility and for general corporate purposes. Each share of 8.5% convertible perpetual preferred stock has a liquidation preference of $100 and is convertible at the holders option at any time initially into approximately 12.4805shares of the Companys common stock, subject to adjustments upon the occurrence of certain events. Each holder of the convertible perpetual preferred stock is entitled to an annual dividend of $8.50 per share to be paid semi-annually in cash, common stock or a combination thereof at the Companys election, with the first dividend payment due in February 2010. The convertible perpetual preferred stock is not redeemable by the Company at any time. After February20, 2014, the Company may cause all outstanding shares of the convertible perpetual preferred stock to automatically convert into common stock at the then-prevailing conversion rate if certain conditions are met. Common Stock.The following table presents information regarding the Companys common stock (in thousands): June30, December31, 2009 2008 Shares authorized 400,000 400,000 Shares outstanding at end of period 181,856 166,046 Shares held in treasury 1,398 1,326 During March 2008, the Company issued 3,465,593shares of common stock upon the conversion of 339,823shares of its redeemable convertible preferred stock. In May 2008, the Company converted the remaining 1,844,464 outstanding shares of its redeemable convertible preferred stock into 18,810,260shares of its common stock as permitted under the terms of the redeemable convertible preferred stock. See additional discussion in Note14. In April 2009, the Company completed a registered underwritten offering of 14,480,000shares of its common stock, including 2,280,000shares of common stock acquired by the underwriters from the Company to cover over-allotments. Net proceeds to the Company from the offering were approximately $107.7million, after deducting offering expenses of approximately $2.3million, and were used to repay a portion of the amount outstanding under the senior credit facility and for general corporate purpo

Related Party Transactions

Related Party Transactions
	6 Months Ended Jun. 30, 2009 USD / shares
Related Party Transactions [Abstract]
Related Party Transactions	16. Related Party Transactions The Company has transactions with certain stockholders and other related parties in the ordinary course of business. These transactions primarily consist of purchases of drilling equipment and sales of oil field service supplies. Following is a summary of significant transactions with such related parties for the three and six-month periods ended June30, 2009 and 2008 (in thousands): Three Months Ended Six Months Ended June30, June30, 2009 2008 2009 2008 Sales to and reimbursements from related parties $ 974 $ 27,070 $ 4,406 $ 52,426 Purchases of services from related parties $ 5,464 $ 19,171 $ 14,406 $ 39,061 The Company leases office space in Oklahoma City from a member of its Board of Directors. The Company believes that the payments made under this lease are at fair market rates. Rent expense related to the lease totaled $0.2million and $0.3million for the three-month periods ended June30, 2009 and 2008, respectively. For the six-month periods ended June30, 2009 and 2008, rent expense under this lease was $0.5million and $0.7million, respectively. The lease expires in August 2009. Larclay, L.P.Until April15, 2009, Lariat and its partner Clayton Williams Energy, Inc. (CWEI) each owned a 50% interest in Larclay L.P. (Larclay), a limited partnership, and, until such time, Lariat operated the rigs owned by the partnership. On April15, 2009, Lariat completed an assignment to CWEI of Lariats 50% equity interest in Larclay pursuant to the terms of an Assignment and Assumption Agreement (the Larclay Assignment) entered into between Lariat and CWEI on March13, 2009. Pursuant to the Larclay Assignment, Lariat assigned all of its right, title and interest in and to Larclay to CWEI effective April15, 2009, and CWEI assumed all of the obligations and liabilities of Lariat relating to Larclay from and after April15, 2009. The Company fully impaired both the investment in and notes receivable due from Larclay at December31, 2008. There were no additional losses on Larclay during the three or six-month period ended June30, 2009 or as a result of the Larclay Assignment. The following table summarizes the Companys other transactions with Larclay for the three and six-month periods ended June30, 2009 and 2008 (in thousands): Three Months Ended Six Months Ended June30, June30, 2009 2008 2009 2008 Sales to and reimbursements from Larclay $ 214 $ 12,035 $ 2,962 $ 22,973 Purchases of services from Larclay $ $ 13,288 $ 1,762 $ 23,958 June30, December31, 2009 2008 Accounts receivable from Larclay $

Subsequent Events

Subsequent Events
	6 Months Ended Jun. 30, 2009 USD / shares
Subsequent Events [Abstract]
Subsequent Events	17. Subsequent Events Events occurring after June30, 2009 were evaluated as of August6, 2009, the date this Quarterly Report was issued, in compliance with SFASNo.165 to ensure that any subsequent events that met the criteria for recognition and/or disclosure in this report have been included. No such events were noted.

Business Segment Information

Business Segment Information
	6 Months Ended Jun. 30, 2009 USD / shares
Business Segment Information [Abstract]
Business Segment Information	18. Business Segment Information The Company has three business segments: exploration and production, drilling and oil field services and midstream gas services. These segments represent the Companys three main business units, each offering different products and services. The exploration and production segment is engaged in the acquisition, development and production of natural gas and crude oil properties. The drilling and oil field services segment is engaged in the land contract drilling of natural gas and crude oil wells. The midstream gas services segment is engaged in the purchasing, gathering, processing, treating and selling of natural gas. The all other column in the tables below includes items not related to the Companys reportable segments including the Companys CO2 gathering and sales operations and corporate operations. Management evaluates the performance of the Companys business segments based on operating income, which is defined as segment operating revenues less operating expenses and depreciation, depletion and amortization. Summarized financial information concerning the Companys segments is shown in the following table (in thousands): Exploration and Drilling and Oil Midstream Gas Consolidated Production Field Services Services All Other Total Three Months Ended June30, 2009 Revenues $ 103,727 $ 55,975 $ 71,838 $ 6,511 $ 238,051 Inter-segment revenue (64 ) (50,877 ) (52,742 ) (269 ) (103,952 ) Total revenues $ 103,663 $ 5,098 $ 19,096 $ 6,242 $ 134,099 Operating loss $ (5,248 ) $ (2,801 ) $ (28,030 ) $ (13,908 ) $ (49,987 ) Interest expense, net (41,387 ) (558 ) (286 ) (42,231 ) Other income, net 483 200 683 Loss before income taxes $ (46,152 ) $ (3,359 ) $ (27,830 ) $ (14,194 ) $ (91,535 ) Capital expenditures(2) $ 121,347 $ 188 $ 17,340 $ 8,813 $ 147,688 Depreciation, depletion and amortization $ 35,025 $ 6,909 $ 2,115 $ 4,335 $ 48,384 Three Months Ended June30, 2008 Revenues $ 293,472 $ 108,720 $ 219,819 $ 5,653 $ 627,664 Inter-segment revenue (44 ) (96,856 )

Condensed Consolidating Financi

Condensed Consolidating Financial Information
	6 Months Ended Jun. 30, 2009 USD / shares
Financial Information [Abstract]
Condensed Consolidating Financial Information	19. Condensed Consolidating Financial Information The Company is providing condensed consolidating financial information for its subsidiaries that are guarantors of its registered debt. Subsidiary guarantors are wholly owned and have, jointly and severally, unconditionally guaranteed on an unsecured basis the Companys 8.625%Senior Notes and Senior Floating Rate Notes. The subsidiary guarantees (i)rank equally in right of payment with all of the existing and future senior debt of the subsidiary guarantors; (ii)rank senior to all of the existing and future subordinated debt of the subsidiary guarantors; (iii)are effectively subordinated in right of payment to any existing or future secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such obligations; and (iv)are structurally subordinated to all debt and other obligations of the subsidiaries of the guarantors who are not themselves guarantors. The Company has not presented separate financial and narrative information for each of the subsidiary guarantors because it believes that such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the guarantees. Effective May1, 2009, SandRidge Energy, Inc., the parent, contributed all of its rights, title and interest in its natural gas and crude oil related assets and accompanying liabilities to one of its wholly owned subsidiaries, leaving it with no natural gas or crude oil related assets or operations. The following condensed consolidating financial information represents the financial information of SandRidge Energy, Inc. and its wholly owned subsidiary guarantors, prepared on the equity basis of accounting. The non-guarantor subsidiaries are minor and, therefore, not presented separately. The information is presented in accordance with the requirements of Rule3-10 under the SECs RegulationS-X. The financial information may not necessarily be indicative of the financial position, results of operations, or cash flows had the subsidiary guarantors operated as independent entities. Condensed Consolidating Balance Sheets June30, 2009 Parent Guarantor Company Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 162 $ 459 $ $ 621 Accounts and notes receivable, net 58,417 364,633 (349,724 ) 73,326 Derivative contracts 207,342 207,342 Other current assets 40,169 40,169 Total current assets 58,579 612,603 (349,724 ) 321,458 Property, plant and equipment, net 1,920,902 1,920,902 Investment in subsidiaries 2,249,681 (2,249,681 )