00 - Document and Entity Inform
00 - Document and Entity Information (USD $) | |
In Billions, except Share data | 3 Months Ended
Mar. 31, 2009 |
Document and Entity Information [Abstract] | |
Entity Registrant Name | SANDRIDGE ENERGY, INC. |
Entity Central Index Key | 0001349436 |
Document Type | 10-Q |
Document Period End Date | 2009-03-31 |
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) | 181,898,103 |
01 - Condensed Consolidated Bal
01 - Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Mar. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $76 | $636 |
Accounts receivable, net | ||
Trade | 78,122 | 102,746 |
Related parties | 483 | 6,327 |
Derivative contracts | 270,170 | 201,111 |
Inventories | 3,682 | 3,686 |
Costs in excess of billings | 16,234 | 0 |
Other current assets | 39,055 | 41,407 |
Total current assets | 407,822 | 355,913 |
Natural gas and crude oil properties, using full cost method of accounting | ||
Proved | 4,933,712 | 4,676,072 |
Unproved | 221,161 | 215,698 |
Less: accumulated depreciation, depletion and impairment | (3,732,599) | (2,369,840) |
Natural gas and crude oil properties, using full cost method of accounting, net | 1,422,274 | 2,521,930 |
Other property, plant and equipment, net | 676,551 | 653,629 |
Derivative contracts | 84,736 | 45,537 |
Investments | 7,374 | 6,088 |
Restricted deposits | 32,796 | 32,843 |
Other assets | 39,032 | 39,118 |
Total assets | 2,670,585 | 3,655,058 |
Current liabilities: | ||
Current maturities of long-term debt | 16,408 | 16,532 |
Accounts payable and accrued expenses: | ||
Trade | 267,832 | 366,337 |
Related parties | 0 | 230 |
Derivative contracts | 5,184 | 5,106 |
Asset retirement obligation | 126 | 275 |
Billings in excess of costs incurred | 0 | 14,144 |
Total current liabilities | 289,550 | 402,624 |
Long-term debt | 2,392,289 | 2,358,784 |
Other long-term obligations | 11,967 | 11,963 |
Derivative contracts | 3,809 | 3,639 |
Asset retirement obligation | 87,233 | 84,497 |
Total liabilities | 2,784,848 | 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 March 31, 2009 and no shares issued and outstanding in 2008; aggregate liquidation preference of $265,000 at March 31, 2009 | 3 | 0 |
Common stock, $0.001 par value, 400,000 shares authorized; 168,968 issued and 167,572 outstanding at March 31, 2009 and 167,372 issued and 166,046 outstanding at December 31, 2008 | 163 | 163 |
Additional paid-in capital | 2,418,547 | 2,170,986 |
Treasury stock, at cost | (19,845) | (19,332) |
Accumulated deficit | (2,513,153) | (1,358,296) |
Total SandRidge Energy, Inc. stockholders' (deficit) equity | (114,285) | 793,521 |
Noncontrolling interest | 22 | 30 |
Total (deficit) equity | (114,263) | 793,551 |
Total liabilities and equity | $2,670,585 | $3,655,058 |
011 - Condensed Consolidated Ba
011 - Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Thousands | Mar. 31, 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 authorized | 2,650 | 0 |
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 | 168,968 | 167,372 |
Common stock, shares outstanding | 167,572 | 166,046 |
02 - Condensed Consolidated Sta
02 - Condensed Consolidated Statements of Operations (USD $) | ||
Share data in Thousands | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 |
Revenues: | ||
Natural gas and crude oil | $121,241,000 | $205,487,000 |
Drilling and services | 6,395,000 | 12,334,000 |
Midstream and marketing | 25,956,000 | 46,409,000 |
Other | 5,421,000 | 4,856,000 |
Total revenues | 159,013,000 | 269,086,000 |
Expenses: | ||
Production | 45,579,000 | 34,188,000 |
Production taxes | 1,491,000 | 9,220,000 |
Drilling and services | 5,606,000 | 7,169,000 |
Midstream and marketing | 23,362,000 | 40,418,000 |
Depreciation, depletion and amortization-natural gas and crude oil | 60,093,000 | 65,076,000 |
Depreciation, depletion and amortization-other | 12,726,000 | 17,965,000 |
Impairment | 1,304,418,000 | 0 |
General and administrative | 28,485,000 | 20,994,000 |
(Gain) loss on derivative contracts | (206,647,000) | 136,844,000 |
Loss on sale of assets | 180,000 | 23,000 |
Total expenses | 1,275,293,000 | 331,897,000 |
Loss from operations | (1,116,280,000) | (62,811,000) |
Other income (expense): | ||
Interest income | 11,000 | 813,000 |
Interest expense | (40,748,000) | (25,172,000) |
Income from equity investments | 234,000 | 859,000 |
Other income (expense), net | 760,000 | (17,000) |
Total other (expense) income | (39,743,000) | (23,517,000) |
Loss before income tax benefit | (1,156,023,000) | (86,328,000) |
Income tax benefit | (1,169,000) | (30,538,000) |
Net loss | (1,154,854,000) | (55,790,000) |
Less: net income attributable to noncontrolling interest | 3,000 | 835,000 |
Net loss attributable to SandRidge Energy, Inc. | (1,154,857,000) | (56,625,000) |
Preferred stock dividends and accretion | 0 | 9,582,000 |
Loss applicable to SandRidge Energy, Inc. common stockholders | (1,154,857,000) | (66,207,000) |
Basic and diluted loss per share applicable to SandRidge Energy, Inc. common stockholders | -7.07 | -0.47 |
Weighted average number of common shares outstanding: | ||
Basic | 163,321 | 141,044 |
Diluted | 163,321 | 141,044 |
03 - Condensed Consolidated Sta
03 - Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($1,154,854) | ($55,790) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 72,819 | 83,041 |
Impairment | 1,304,418 | 0 |
Debt issuance cost amortization | 1,611 | 1,097 |
Deferred income taxes | 4 | (30,617) |
Unrealized (gain) loss on derivative contracts | (108,010) | 143,367 |
Loss on sale of assets | 180 | 23 |
Investment loss (income) - restricted deposits | 47 | (192) |
Income from equity investments | (234) | (859) |
Stock-based compensation | 5,205 | 3,241 |
Stock-based compensation excess tax benefit | (2,113) | 0 |
Changes in operating assets and liabilities | (45,842) | 13,378 |
Net cash provided by operating activities | 73,231 | 156,689 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures for property, plant and equipment | (350,184) | (418,650) |
Proceeds from sale of assets | 247 | 452 |
Fundings of restricted deposits | 0 | (781) |
Net cash used in investing activities | (349,937) | (418,979) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings | 559,099 | 340,220 |
Repayments of borrowings | (525,718) | (128,937) |
Dividends paid-preferred | 0 | (9,516) |
Noncontrolling interest distributions | (11) | (632) |
Proceeds from issuance of 8.5% convertible perpetual preferred stock | 243,289 | 0 |
Purchase of treasury stock | (513) | (1,254) |
Net cash provided by financing activities | 276,146 | 199,881 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (560) | (62,409) |
CASH AND CASH EQUIVALENTS, beginning of year | 636 | 63,135 |
CASH AND CASH EQUIVALENTS, end of period | 76 | 726 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | ||
Change in accrued capital expenditures | (53,024) | 0 |
Accretion on redeemable convertible preferred stock | $0 | $1,487 |
04 - Condensed Consolidated Sta
04 - Condensed Consolidated Statement of Changes in Equity (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2009 | Dec. 31, 2008
|
Beginning Balance | $793,551 | |
Distributions to noncontrolling interest owners | (11) | |
Issuance of 8.5% convertible perpetual preferred stock | 243,289 | |
Purchase of treasury stock | (513) | |
Stock-based compensation | 6,388 | |
Stock-based compensation excess tax benefit | (2,113) | |
Net (loss) income | (1,154,854) | |
Ending Balance | (114,263) | 793,551 |
Common Stock | ||
Beginning Balance | 163 | |
Beginning Balance, Shares | 166,046 | |
Issuance of restricted stock awards, net of cancellations, Shares | 1,526 | |
Ending Balance | 163 | 163 |
Ending Balance, Shares | 167,572 | 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 | |
Ending Balance, Shares | 2,650 | |
Additional Paid-in Capital | ||
Beginning Balance | 2,170,986 | |
Issuance of 8.5% convertible perpetual preferred stock | 243,286 | |
Stock-based compensation | 6,388 | |
Stock-based compensation excess tax benefit | (2,113) | |
Ending Balance | 2,418,547 | 2,170,986 |
Treasury Stock | ||
Beginning Balance | (19,332) | |
Purchase of treasury stock | (513) | |
Ending Balance | (19,845) | (19,332) |
Accumulated Deficit | ||
Beginning Balance | (1,358,296) | |
Net (loss) income | (1,154,857) | |
Ending Balance | (2,513,153) | (1,358,296) |
Noncontrolling Interest | ||
Beginning Balance | 30 | |
Distributions to noncontrolling interest owners | (11) | |
Net (loss) income | 3 | |
Ending Balance | $22 | $30 |
0601 - Basis of Presentation
0601 - Basis of Presentation | |
3 Months Ended
Mar. 31, 2009 | |
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 Companys Annual Report on Form10-K for the fiscal year ended December31, 2008 (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. |
0602 - Significant Accounting P
0602 - Significant Accounting Policies | |
3 Months Ended
Mar. 31, 2009 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies For a description of the Companys accounting policies, refer to Note1 of the consolidated financial statements included in the 2008 Form10-K. Reclassifications.Certain reclassifications have been made in prior period financial statements to conform with current period presentation. Recent Accounting Pronouncements.Effective January1, 2008, the Company implemented Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements, for its financial assets and liabilities measured on a recurring basis. SFASNo.157 defines fair value, establishes a framework for measuring fair value and expands required disclosures about fair value measurements. See Note3. In October 2008, the Financial Accounting Standards Board (FASB) issued Staff Position FAS157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, (FSP157-3) which was effective upon issuance. FSP157-3 clarifies the application of SFASNo.157 in determining the fair value of a financial asset when the market for that financial asset is not active. As of March31, 2009, the Company had no financial assets with a market that was not active. Accordingly, FSP157-3 had no effect on the Companys current financial statements. Effective January1, 2009, the Company implemented SFASNo.157 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 activi |
0603 - Fair Value Measurements
0603 - Fair Value Measurements | |
3 Months Ended
Mar. 31, 2009 | |
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. 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. SFASNo.157 applies to all assets and liabilities that are measured and reported on a fair value basis. 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: Level1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level2: 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. Level3: Measurement based on prices or valuation models that required 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. 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 swap 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 the counterparties. Included in these models are discount factors that the Company must estimate in its calculation. Additionally, the Company applie |
0604 - Property, Plant and Equi
0604 - Property, Plant and Equipment | |
3 Months Ended
Mar. 31, 2009 | |
Property, Plant and Equipment Disclosure [Abstract] | |
Property, Plant and Equipment | 4. Property, Plant and Equipment Property, plant and equipment consists of the following (in thousands): March31, December31, 2009 2008 Natural gas and crude oil properties: Proved $ 4,933,712 $ 4,676,072 Unproved 221,161 215,698 Total natural gas and crude oil properties 5,154,873 4,891,770 Less accumulated depreciation, depletion and impairment(1) (3,732,599 ) (2,369,840 ) Net natural gas and crude oil properties capitalized costs 1,422,274 2,521,930 Land 13,938 11,250 Non natural gas and crude oil equipment 800,108 764,792 Buildings and structures 69,215 71,859 Total 883,261 847,901 Less accumulated depreciation, depletion and amortization (206,710 ) (194,272 ) Net capitalized costs 676,551 653,629 Total property, plant and equipment, net $ 2,098,825 $ 3,175,559 (1) Includes the cumulative full cost ceiling limitation impairment charges of $3,159.4million and $1,855.0million at March31, 2009 and December31, 2008, respectively. In January 2009, the asset lives of certain of the drilling, oil field services and midstream assets were changed to align with industry average lives for similar assets. The amount of capitalized interest included in the above non natural gas and crude oil equipment balance at both March31, 2009 and December31, 2008 was approximately $3.8million. |
0605 - Impairment
0605 - Impairment | |
3 Months Ended
Mar. 31, 2009 | |
Impairment [Abstract] | |
Impairment | 5. Impairment Full Cost Ceiling Limitation.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 March31, 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 oil and gas properties by $1,304.4million due to the full cost ceiling limitation. |
0606 - Costs in Excess of Billi
0606 - Costs in Excess of Billings (Billings in Excess of Costs Incurred) | |
3 Months Ended
Mar. 31, 2009 | |
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. 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. 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 30-year treating agreement executed simultaneously with the construction agreement, Occidental will remove CO2 from the Companys delivered natural gas. The Company will retain all methane gas from the Century Plant and its other existing plants. 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 $16.2million and ($14.1)million and were reported as a current asset and current liability in the condensed consolidated balance sheets at March31, 2009 and December31, 2008, respectively. During April 2009, the Company issued and received payment for a progress billing in the amount of $42.2million. |
0607 - Asset Retirement Obligat
0607 - Asset Retirement Obligation | |
3 Months Ended
Mar. 31, 2009 | |
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 March31, 2009 is as follows (in thousands): Asset retirement obligation, December31, 2008 $ 84,772 Liability incurred upon acquiring and drilling wells 995 Revisions in estimated cash flows (162 ) Liability settled in current period Accretion of discount expense 1,754 Asset retirement obligation, March31, 2009 87,359 Less: Current portion 126 Asset retirement obligation, net of current $ 87,233 |
0608 - Long Term Debt
0608 - Long Term Debt | |
3 Months Ended
Mar. 31, 2009 | |
Long-Term Debt Disclosure [Abstract] | |
Long-Term Debt | 8. Long-Term Debt Long-term debt consists of the following (in thousands): March31, December31, 2009 2008 Senior credit facility $ 610,857 $ 573,457 Other notes payable: Drilling rig fleet and related crude oil field services equipment 29,229 33,030 Mortgage 18,611 18,829 Senior Floating Rate Notes due 2014 350,000 350,000 8.625%Senior Notes due 2015 650,000 650,000 8.0%Senior Notes due 2018 750,000 750,000 Total debt 2,408,697 2,375,316 Less: Current maturities of long-term debt 16,408 16,532 Long-term debt $ 2,392,289 $ 2,358,784 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 $1.1billion at March31, 2009. The senior credit facility matures on November21, 2011 and is available to be drawn on and repaid without restriction so long as the Company is in compliance with its terms, including certain financial covenants. 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 senior notes. The senior credit facility also contains financial covenants, including maintenance of agreed upon 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)current ratio, 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 derivative contracts are disregarded. As of March31, 2009, the Company was in compliance with all of the financial covenants under the senior credit facility. The obligations under the senior credit facility are guaranteed by certain Company subsidiaries and are secured by first priority liens on all shares of capital stock of each of the Companys material present and future subsidiaries; all intercompany debt of the Company; and substantially all of the Com |
0609 - Other Long Term Obligati
0609 - Other Long Term Obligations | |
3 Months Ended
Mar. 31, 2009 | |
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 consolidated balance sheets at March31, 2009 and December31, 2008. The non-current unpaid settlement amount of $10.0million has been included in other long-term obligations in the consolidated balance sheets at March31, 2009 and December31, 2008. |
0610 - Derivatives
0610 - Derivatives | |
3 Months Ended
Mar. 31, 2009 | |
Derivatives [Abstract] | |
Derivatives | 10. 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. The primary risk managed by the Companys use of commodity derivative contracts is commodity price risk. 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 contain credit risk related contingent features. At March31, 2009 and December31, 2008, the Companys commodity derivative contracts consisted of fixed price swaps and basis swaps, which are included in the derivative descriptions 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. Collars Contain a fixed floor price (put) and a fixed ceiling price (call). If the market price exceeds the call strike price or falls below the put strike price, the Company receives the fixed price and pays the market price. If the market price is between the call and the put strike price, no payments are due from either party. 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. In January 2008, the Company entered into a $350.0million notional interest rate swap agreement to fix the variable LIBOR interest rate on its floating rate senior term loan at 6.26% per annum for the period April1, 2008 to April1, 2011 to manage the interest rate risk on a portion of its floating rate debt. Due to the exchange of the floating rate senior term loan for Senior Floating Rate Notes, the interest rate swap is now being used to fix the variable LIBOR interest rate on the Senior Floating Rate Notes at 6.26% per annum through April 2011. This swap has not been designated as a hedge. The Companys derivative contracts have not been designated as hedges. The Company records all derivative contracts at fair value. Changes in derivative contract fair values are recognized in earnings. Cash settlements and valuation gains and losses are included in (gain) loss on derivative contracts in the consolidated statements of operations. All swaps are settled on a monthly basis. The balance sheet classification of the assets and liabilities related to derivative contracts is summarized below at March31, 2009 and December31, 2008 (in thousands): Balance Sheet Fair Value Type of Contract Classification March31, 2009 December31, 2008 Derivative assets Natural gas swaps Derivative assets-current $ 260,801 $ 188,045 Crude oil price swaps Derivative assets-current 9,369 13,066 Natural gas swaps Derivative assets-non |
0611 - Income Taxes
0611 - Income Taxes | |
3 Months Ended
Mar. 31, 2009 | |
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-month periods ended March 31 (in thousands): 2009 2008 Current: Federal $ (2,170 ) $ State 997 79 (1,173 ) 79 Deferred: Federal 4 (30,487 ) State (130 ) 4 (30,617 ) Total (benefit) provision $ (1,169 ) $ (30,538 ) 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 period ended March31, 2009, the Company recorded a $408.3million 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 $1,156.0million. 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 Uncertainty in Income Taxes an interpretation of FASB Statement No.109 (FIN48). Tax years 1994 to present remain open for the majority of taxing authorities due to net operation loss utilization. The Companys accounting policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company does not have an accrued liability for interest and penalties at March31, 2009. For the three months ended March31, 2009 and March31, 2008, net income tax (r |
0612 - Earnings
0612 - Earnings (Loss) Per Share | |
3 Months Ended
Mar. 31, 2009 | |
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. The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share for the three-month periods ended March 31 (in thousands): 2009 2008 Weighted average basic common shares outstanding 163,321 141,044 Effect of dilutive securities: Restricted stock Weighted average diluted common and potential common shares outstanding 163,321 141,044 For the three-month periods ended March31, 2009 and 2008, restricted stock awards covering 4.2million shares and 2.2million 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-month period ended March31, 2009 and with respect to its outstanding redeemable convertible preferred stock for the three-month period ended March31, 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-month periods ended March31, 2009 and 2008. |
0613 - Commitments and Continge
0613 - Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2009 | |
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 which, individually or in the aggregate, could have a material effect on the financial condition, operations or cash flows of the Company. |
0614 - Redeemable Convertible P
0614 - Redeemable Convertible Preferred Stock | |
3 Months Ended
Mar. 31, 2009 | |
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, subject to certain anti-dilution adjustments. 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 November 15, 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. This conversion resulted in an increase to additional paid-in capital of $71.3million, 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 a charge to retained earnings for $1.1million in accelerated accretion expense related to the converted redeemable convertible preferred shares. Approximately $8.1million in paid and unpaid dividends on the redeemable convertible preferred stock has been included in the Companys earnings per share calculations for the three-month period ended March31, 2008 as presented in the condensed consolidated |
0615 - Equity
0615 - Equity | |
3 Months Ended
Mar. 31, 2009 | |
Equity Disclosure [Abstract] | |
Equity | 15. Equity Preferred Stock.The following table presents information regarding the Companys preferred stock (in thousands): March31, 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 buyers eligible under Rule144A of 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 per share 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 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): March31, December31, 2009 2008 Shares authorized 400,000 400,000 Shares outstanding at end of period 167,572 166,046 Shares held in treasury 1,396 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. See additional discussion in Note14. Treasury Stock.The Company makes required tax payments on behalf of employees when their restricted stock awards vest and then withholds a number of vested shares of common stock having a value on the date of vesting equal to the tax obligation. As a result of such transactions, the Company withheld approximately 70,000shares at a total value of $0.5million and approximately 38,000shares at a total value of $1.3million during the three-month periods ended March31, 2009 and 2008, respectively. These shares were accounted for as treasury stock. In February 2008, the Company transferred 184,484shares of its treasury stock into an account established for the benefit of the Companys 401(k) Plan. The transfer was made in order to satisfy the C |
0616 - Related Party Transactio
0616 - Related Party Transactions | |
3 Months Ended
Mar. 31, 2009 | |
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 related parties for the three-month periods ended March31, 2009 and 2008 (in thousands): 2009 2008 Sales to and reimbursements from related parties $ 3,813 $ 25,356 Purchases from related parties $ 8,942 $ 19,890 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 $0.3million and $0.4million for the three-month periods ended March31, 2009 and 2008, 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. Larclay currently owns twelve rigs, one of which has not yet been assembled. Larclay financed the acquisition cost of its twelve rigs with a loan from a third party, secured by the purchased rigs, and a loan from CWEI. In addition, CWEI has guaranteed a portion of the third party debt. Until April15, 2009, Lariat operated the rigs owned by the partnership. Under the partnership agreement, if Larclay had an operating shortfall, Lariat and CWEI were obligated to provide loans to the partnership. In April 2008, Lariat and CWEI each made loans of $2.5million to Larclay under promissory notes. The notes yielded interest at a floating rate based on a LIBOR average plus 3.25% as provided in the Larclay partnership agreement. In June 2008, Larclay executed a $15.0million revolving promissory note with each of Lariat and CWEI. Amounts drawn under each revolving promissory note bear interest at a floating rate based on a LIBOR average plus 3.25% as provided in the Larclay partnership agreement. Lariat advanced $5.0million to Larclay under the revolving promissory note during the year ended December31, 2008. Total advances outstanding to Larclay were $7.5million ($2.5million promissory note and $5.0million drawn on revolving promissory note) at December31, 2008. Due to economic conditions and cash shortfalls within Larclay, the Company impaired both the notes receivable and its investment in Larclay as of December31, 2008. No additional advances were made by the Company to Larclay during the three-month period ended March31, 2009. 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 Agreement) entered into between Lariat and CWEI on March13, 2009. As a result of the transactions contemplated by the Agreement, CWEI owns 100% of Larclay. Pursuant to the Agreement, Lariat assigned all of its right, title and interest in and to Larclay to CWEI effe |
0617 - Subsequent Events
0617 - Subsequent Events | |
3 Months Ended
Mar. 31, 2009 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events 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 $108.0million after deducting offering expenses of approximately $2.0million and were used to repay a portion of the amount outstanding under the senior credit facility and for general corporate purposes. In April 2009, the Companys borrowing base under its senior credit facility was redetermined and remained unchanged at $1.1billion. In May 2009, the Company signed an agreement to sell the rights to its East Texas leasehold below the Cotton Valley formation for $60.0million. The transaction is subject to customary adjustments and closing conditions and is expected to close during the second quarter of 2009. |
0618 - Industry Segment Informa
0618 - Industry Segment Information | |
3 Months Ended
Mar. 31, 2009 | |
Industry Segment Information [Abstract] | |
Industry Segment Information | 18. Industry 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 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 March31, 2009 Revenues $ 121,933 $ 93,814 $ 94,367 $ 5,896 $ 316,010 Inter-segment revenue (66 ) (87,503 ) (68,953 ) (475 ) (156,997 ) Total revenues $ 121,867 $ 6,311 $ 25,414 $ 5,421 $ 159,013 Operating (loss) income(1) $ (1,095,862 ) $ (2,755 ) $ 210 $ (17,873 ) $ (1,116,280 ) Interest expense, net (39,818 ) (633 ) (286 ) (40,737 ) Other income, net 760 234 994 (Loss) income before income taxes $ (1,134,920 ) $ (3,388 ) $ 444 $ (18,159 ) $ (1,156,023 ) Capital expenditures(2) $ 261,884 $ 2,377 $ 23,948 $ 8,951 $ 297,160 Depreciation, depletion and amortization $ 60,760 $ 7,286 $ 1,842 $ 2,931 $ 72,819 At March31, 2009 Total assets $ 1,975,508 $ 263,938 $ 318,774 $ 112,365 $ 2,670,585 Three Months Ended March |
0619 - Condensed Consolidating
0619 - Condensed Consolidating Financial Information | |
3 Months Ended
Mar. 31, 2009 | |
Condensed Consolidating 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 public debt. Subsidiary guarantors are wholly owned and have, jointly and severally, unconditionally guaranteed on an unsecured basis the Companys 8.625%Senior Notes due 2015, Senior Floating Rate Notes due 2014 and 8.0%Senior Notes due 2018. 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. 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. March31, 2009 Parent Guarantor Company Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 46 $ 30 $ $ 76 Accounts and notes receivable, net 1,026,032 54,846 (1,002,273 ) 78,605 Derivative contracts 270,170 270,170 Other current assets 2,966 56,005 58,971 Total current assets 1,299,214 110,881 (1,002,273 ) 407,822 Property, plant and equipment, net 650,146 1,448,679 2,098,825 Investment in subsidiaries 283,930 (283,930 ) Other assets 172,749 42,573 (51,384 ) 163,938 Total assets $ 2,406,039 $ 1,602,133 $ (1,337,587 ) $ 2,670,585 LIABILITIES |