SandRidge Energy (SD) 10-K 1 Mar 10 2009 FY Annual report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$7,861	$636
Accounts receivable, net:
Trade	105,412	102,746
Related parties	64	6,327
Derivative contracts	105,994	201,111
Inventories	3,707	3,686
Costs in excess of billings	12,346	0
Other current assets	20,580	41,407
Total current assets	255,964	355,913
Natural gas and oil properties, using full cost method of accounting
Proved	5,913,408	4,676,072
Unproved	281,811	215,698
Less: accumulated depreciation, depletion and impairment	(4,223,437)	(2,369,840)
Natural gas and oil properties, using full cost method, net, Total	1,971,782	2,521,930
Other property, plant and equipment, net	461,861	653,629
Derivative contracts	0	45,537
Investments	0	6,088
Restricted deposits	32,894	32,843
Other assets	57,816	39,118
Total assets	2,780,317	3,655,058
Current liabilities:
Current maturities of long-term debt	12,003	16,532
Accounts payable and accrued expenses:
Trade	203,048	366,337
Related parties	860	230
Derivative contracts	7,080	5,106
Asset retirement obligation	2,553	275
Billings in excess of costs incurred	0	14,144
Total current liabilities	225,544	402,624
Long-term debt	2,566,935	2,358,784
Other long-term obligations	14,099	11,963
Derivative contracts	61,060	3,639
Asset retirement obligation	108,584	84,497
Total liabilities	2,976,222	2,861,507
Preferred stock, $0.001 par value, 50,000 shares authorized:
Common stock, $0.001 par value, 400,000 shares authorized; 210,581 issued and 208,715 outstanding at December 31, 2009 and 167,372 issued and 166,046 outstanding at December 31, 2008	203	163
Additional paid-in capital	2,961,613	2,170,986
Treasury stock, at cost	(25,079)	(19,332)
Accumulated deficit	(3,142,699)	(1,358,296)
Total SandRidge Energy, Inc., stockholders' (deficit) equity	(205,957)	793,521
Noncontrolling interest	10,052	30
Total (deficit) equity	(195,905)	793,551
Total liabilities and equity	2,780,317	3,655,058
8.5% Convertible perpetual preferred stock
Preferred stock, $0.001 par value, 50,000 shares authorized:
Preferred stock	3	0
6.0% Convertible perpetual preferred stock
Preferred stock, $0.001 par value, 50,000 shares authorized:
Preferred stock	$2	$0

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Thousands	Dec. 31, 2009	Dec. 31, 2008
Preferred stock, par value	0.001	0.001
Preferred stock, shares authorized	50,000	50,000
Common stock, par value	0.001	0.001
Common stock, shares authorized	400,000	400,000
Common stock, issued	210,581	167,372
Common stock, outstanding	208,715	166,046
8.5% Convertible perpetual preferred stock
Preferred stock, shares issued	2,650	0
Preferred stock, shares outstanding	2,650	0
Preferred stock, aggregate liquidation preference	$265,000	$0
6.0% Convertible perpetual preferred stock
Preferred stock, shares issued	2,000	0
Preferred stock, shares outstanding	2,000	0
Preferred stock, aggregate liquidation preference	$200,000	$0

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Thousands, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Revenues:
Natural gas and oil	$454,705	$908,689	$477,612
Drilling and services	23,902	47,199	73,197
Midstream and marketing	86,028	207,602	107,765
Other	26,409	18,324	18,878
Total revenues	591,044	1,181,814	677,452
Expenses:
Production	169,285	159,004	106,192
Production taxes	4,010	30,594	19,557
Drilling and services	30,899	26,186	44,211
Midstream and marketing	78,684	186,655	94,253
Depreciation and depletion - natural gas and oil	176,027	290,917	173,568
Depreciation, depletion and amortization - other	50,865	70,448	53,541
Impairment	1,707,150	1,867,497	0
General and administrative	100,256	109,372	61,780
Gain on derivative contracts	(147,527)	(211,439)	(60,732)
Loss (gain) on sale of assets	26,419	(9,273)	(1,777)
Total expenses	2,196,068	2,519,961	490,593
(Loss) income from operations	(1,605,024)	(1,338,147)	186,859
Other income (expense):
Interest income	375	3,569	4,694
Interest expense	(185,691)	(147,027)	(117,185)
Income from equity investments	1,020	1,398	4,372
Other income, net	7,272	1,454	729
Total other (expense) income	(177,024)	(140,606)	(107,390)
(Loss) income before income tax (benefit) expense	(1,782,048)	(1,478,753)	79,469
Income tax (benefit) expense	(8,716)	(38,328)	29,524
Net (loss) income	(1,773,332)	(1,440,425)	49,945
Less: net income (loss) attributable to noncontrolling interest	2,258	855	(276)
Net (loss) income attributable to SandRidge Energy, Inc.	(1,775,590)	(1,441,280)	50,221
Preferred stock dividends and accretion	8,813	16,232	39,888
(Loss applicable) income available to SandRidge Energy, Inc., common stockholders	($1,784,403)	($1,457,512)	$10,333
Basic and Diluted Earnings Per Share:
Net (loss) income attributable to SandRidge Energy, Inc.	-10.15	-9.26	0.46
Preferred stock dividends	-0.05	-0.1	-0.37
Basic and diluted (loss) income per share (applicable) available to SandRidge Energy, Inc., common stockholders	-10.2	-9.36	0.09
Weighted average number of common shares outstanding:
Basic	175,005	155,619	108,828
Diluted	175,005	155,619	110,041

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Thousands	Convertible Perpetual Preferred Stock	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings (Accumulated Deficit)	Noncontrolling Interest	Total
Beginning Balance at Dec. 31, 2006	$0	$92	$574,868	($17,835)	$92,693	$5,092	$654,910
Beginning Balance (in shares) at Dec. 31, 2006	0	91,604
Distributions to noncontrolling interest owners						(144)	(144)
Stock offerings, net of $4.5 million in offering costs (in shares)		50,160
Stock offerings, net of $4.5 million in offering costs		50	1,113,314				1,113,364
Conversion of common stock to redeemable convertible preferred stock (in shares)		(526)
Conversion of common stock to redeemable convertible preferred stock		(1)	(9,650)				(9,651)
Accretion on redeemable convertible preferred stock					(1,421)		(1,421)
Purchase of treasury stock		(1)		(1,660)			(1,661)
Common stock issued under retirement plans (in shares)		32
Common stock issued under retirement plans			379	917			1,296
Stock-based compensation			7,202				7,202
Issuance of restricted stock awards, net of cancellations (in shares)		573
Net (loss) income					50,221	(276)	49,945
Preferred stock dividends					(42,277)		(42,277)
Ending Balance (in shares) at Dec. 31, 2007	0	141,843
Ending Balance at Dec. 31, 2007	0	140	1,686,113	(18,578)	99,216	4,672	1,771,563
Distributions to noncontrolling interest owners						(5,497)	(5,497)
Accretion on redeemable convertible preferred stock					(7,636)		(7,636)
Conversion of redeemable convertible preferred stock (in shares)		22,276
Conversion of redeemable convertible preferred stock		23	458,328				458,351
Purchase of treasury stock				(3,553)			(3,553)
Common stock issued under retirement plans (in shares)		211
Common stock issued under retirement plans			3,167	2,799			5,966
Stock-based compensation			18,784				18,784
Stock-based compensation excess tax benefit			4,594				4,594
Issuance of restricted stock awards, net of cancellations (in shares)		1,716
Net (loss) income					(1,441,280)	855	(1,440,425)
Preferred stock dividends					(8,596)		(8,596)
Ending Balance (in shares) at Dec. 31, 2008	0	166,046
Ending Balance at Dec. 31, 2008	0	163	2,170,986	(19,332)	(1,358,296)	30	793,551
Distributions to noncontrolling interest owners						(26)	(26)
Consolidation of Grey Ranch L.P.						7,790	7,790
Issuance of convertible perpetual preferred stock (in shares)	4,650
Issuance of convertible perpetual preferred stock	5		443,205				443,210
Issuance of common stock (in shares)		40,080
Issuance of common stock		40	324,790				324,830
Purchase of treasury stock				(1,494)			(1,494)
Stock purchase - retirement plans (in shares)		(373)
Stock purchase - retirement plans			(602)	(4,253)			(4,855)
Stock-based compensation			27,098				27,098
Stock-based compensation excess tax benefit			(3,864)				(3,864)
Issuance of restricted stock awards, net of cancellations (in shares)		2,962
Net (loss) income					(1,775,590)	2,258	(1,773,332)
Preferred stock dividends					(8,813)		(8,813)
Ending Balance (in shares) at Dec. 31, 2009	4,650	208,715
Ending Balance at Dec. 31, 2009	$5	$203	$2,961,613	($25,079)	($3,142,699)	$10,052	($195,905)

2_Statement Of Shareholders Equ

Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $)
In Millions	12 Months Ended Dec. 31, 2007
Stock offerings, offering costs	4.5

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	($1,773,332)	($1,440,425)	$49,945
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provision for doubtful accounts	214	1,748	0
Depreciation, depletion and amortization	226,892	361,365	227,109
Impairment	1,707,150	1,867,497	0
Debt issuance costs amortization	7,477	5,623	15,998
Discount amortization on long-term debt	990	0	0
Deferred income taxes	0	(47,530)	28,923
Provision for inventory obsolescence	0	0	203
Unrealized loss (gain) on derivative contracts	200,049	(215,675)	(26,238)
Loss (gain) on sale of assets	26,419	(9,273)	(1,777)
Interest income - restricted deposits	(51)	(402)	(1,354)
Income from equity investments	(1,020)	(1,398)	(4,372)
Stock-based compensation	22,793	18,784	7,202
Changes in operating assets and liabilities increasing (decreasing) cash:
Receivables	8,760	3,735	(19,061)
Inventories	61	307	(1,730)
Other current assets	20,827	(20,603)	12,374
Other assets and liabilities, net	(26,937)	14,271	(5,069)
Accounts payable and accrued expenses	(108,733)	41,165	75,299
Net cash provided by operating activities	311,559	579,189	357,452
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant and equipment	(715,205)	(2,058,415)	(1,280,848)
Acquisitions of assets	(795,074)	0	(116,650)
Proceeds from sale of assets	263,220	158,781	9,034
Contributions on equity investments	0	(1,528)	0
Loans to equity investees	0	(7,500)	0
Refunds of restricted deposits	0	0	10,328
Fundings of restricted deposits	0	(781)	(7,445)
Net cash used in investing activities	(1,247,059)	(1,909,443)	(1,385,581)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings	2,619,607	3,252,209	1,331,541
Repayments of borrowings	(2,416,975)	(1,944,542)	(1,332,219)
Dividends paid-redeemable convertible preferred	0	(17,552)	(33,321)
Noncontrolling interest distributions	(26)	(5,497)	(144)
Proceeds from issuance of common stock	324,830	0	1,114,660
Proceeds from issuance of convertible perpetual preferred stock	443,210	0	0
Stock-based compensation excess tax benefit	(3,864)	4,594	0
Purchase of treasury stock	(5,747)	(3,553)	(1,661)
Debt issuance costs	(18,310)	(17,904)	(26,540)
Net cash provided by financing activities	942,725	1,267,755	1,052,316
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	7,225	(62,499)	24,187
CASH AND CASH EQUIVALENTS, beginning of year	636	63,135	38,948
CASH AND CASH EQUIVALENTS, end of year	7,861	636	63,135
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest, net of amounts capitalized	171,994	131,183	83,567
Cash paid for income taxes	2,908	2,191	2,371
Supplemental Disclosure of Noncash Investing and Financing Activities:
Change in accrued capital expenditures	(70,063)	119,432	0
Convertible perpetual preferred stock dividends payable	8,813	0	0
Redeemable convertible preferred stock dividends, net of dividends paid	0	0	8,956
Insurance premium financed	0	0	1,496
Accretion on redeemable convertible preferred stock	$0	$7,636	$1,421

Summary of Significant Accounti

Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Summary of Significant Accounting Policies	1.Summary of Significant Accounting Policies Nature of Business.SandRidge Energy, Inc. (including its subsidiaries, collectively, the Company or SandRidge) is an independent natural gas and oil company concentrating on exploration, development and production activities. The Company also owns and operates natural gas gathering and treating facilities and carbon dioxide (CO2) treating and transportation facilities and has marketing and tertiary oil recovery operations. In addition, Lariat Services, Inc. (Lariat), a wholly owned subsidiary of the Company, 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. Principles of Consolidation.The consolidated financial statements include the accounts of SandRidge Energy, Inc. and its wholly owned or majority owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications.Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Use of Estimates.The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of natural gas and oil reserves and their values, future production rates and future costs and expenses are inherently uncertain for numerous reasons, including many factors beyond the Companys control. Reservoir engineering is a subjective process of estimating underground accumulations of natural gas and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of data available and of engineering and geological interpretation and judgment. In addition, estimates of reserves may be revised based on actual production, results of subsequent exploration and development activities, prevailing commodity prices, operating costs and other factors. These revisions may be material and could materially affect the Companys future depletion, depreciation and amortization expenses. Risks and Uncertainties.The Companys revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for natural gas and oil, each of which depend on numerous factors beyond the Companys control such as economic conditions, regulatory developments and competition from other energy sources. The energy markets historically have been volatile and natural gas and oil prices in 2009 were substantially lower than in 2008 and 2007, and may

Acquisitions and Dispositions

Acquisitions and Dispositions
	12 Months Ended Dec. 31, 2009 USD / shares
Acquisitions and Dispositions	2. Acquisitions and Dispositions 2007 Acquisitions The Company closed the following acquisitions in 2007: In October 2007, the Company purchased developed and undeveloped properties located in West Texas from an oil and gas company. The purchase price was approximately $73.8million, comprised of $25.0million in cash and a $48.8million note payable. The $25.0million cash consideration paid was funded through a draw on the Companys senior credit facility. All principal and accrued interest (accruing at 7% annually) due on the note payable were repaid in November 2007 with proceeds from the Companys initial public offering of its common stock. For additional discussion of the Companys initial public offering, refer to Note20 herein. In November 2007, the Company purchased a gas treatment plant and related gathering system located in Pecos County, Texas. The purchase price of approximately $10.0million was paid in cash. In November 2007, the Company purchased leasehold acreage and producing well interests located predominantly in the West Texas Overthrust (WTO) from a group of entities controlled by a significant shareholder. The purchase price of approximately $32.0million was paid in cash. 2008 Acquisitions and Dispositions The Company closed the following acquisitions and dispositions in 2008: In May 2008, the Company sold all of its assets located in the Piceance Basin of Colorado. Assets sold included undeveloped acreage, working interests in wells, gathering and compression systems and other facilities related to the wells. Net proceeds to the Company were approximately $147.2million after closing adjustments. The portion of the Companys net proceeds attributable to the disposed gathering and compression systems and facilities exceeded the book basis of those assets resulting in a gain on sale of approximately $7.2million after closing adjustments. The sale of the acreage and working interests in wells was accounted for as an adjustment to the full cost pool with no gain or loss recognized. In July 2008, the Company purchased land, minerals, developed and undeveloped leasehold and interests in producing properties through various transactions for an aggregate purchase price of $67.6million, which was paid in cash. In October 2008, the Company purchased certain working interests and related reserves in Company wells owned by the Companys Chairman and Chief Executive Officer and certain of his affiliates. The purchase price of approximately $67.3million, after closing adjustments, was paid in cash. 2009 Acquisitions and Dispositions The Company closed the following acquisitions and dispositions in 2009: In June 2009, the Company completed the sale of its gathering and compression assets located in the Pion Field, part of the WTO located in Pecos and Terrell counties, Texas. Net proceeds to the Company were approximately $197.5million, resulting in a loss of $26.1million. 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 h

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Dec. 31, 2009 USD / shares
Fair Value Measurements	3. Fair Value Measurements The Company applies the guidance provided under ASC Topic 820, Fair Value Measurements and Disclosures, to its financial assets and liabilities and nonfinancial liabilities that are measured and reported on a fair value basis. Pursuant to this guidance, the Company has classified and disclosed its fair value measurements using the following levels of the fair value hierarchy: Level 1: 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. 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). Assets and liabilities that are 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 as described in ASC Topic 820. 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 by ASC Topic 820. 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. Level 1 Fair Value Measurements Other long-term assets.The fair value of other long-term assets, consisting of assets attributable to the Companys deferred compensation plan, is based on quoted market prices. Level 3 Fair Value Measurements Derivative ContractsThe fair values of the Companys natural gas, oil 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 the Company must estimate in its calculation. Additionally, the Company applies a value weighted average credit default risk rating factor for its counterparties in determining the fair value of its derivative contracts. Based on the inputs for the fair value measurement, the Company classified its derivative contract assets and liabilities as Level 3. The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy as of December31, 2009 (in thousands): Fair Value Measurements Assets / Liabilitiesat Fai

Accounts Receivable

Accounts Receivable
	12 Months Ended Dec. 31, 2009 USD / shares
Accounts Receivable	4.Accounts Receivable A summary of trade accounts receivable is as follows (in thousands): December31, 2009 2008 Natural gas and oil sales $ 82,472 $ 72,266 Natural gas and oil services 10,484 20,476 Joint interest billing 10,101 13,816 Other 5,945 62 109,002 106,620 Less allowance for doubtful accounts (3,590 ) (3,874 ) Total trade accounts receivable, net $ 105,412 $ 102,746 The following table shows the balance in the allowance for doubtful accounts and activity for the years ended December31, 2009, 2008 and 2007 (in thousands): 2009 2008 2007 Allowance for doubtful accounts, January1 $ 3,874 $ 2,238 $ 3,025 Additions charged to costs and expenses 214 1,748 Deductions(1) (498 ) (112 ) (787 ) Allowance for doubtful accounts, December31 $ 3,590 $ 3,874 $ 2,238 (1) Deductions represent write-off of receivables. The Companys customer, SemGroup, L.P. and certain of its subsidiaries (collectively, SemGroup), filed for bankruptcy on July22, 2008. During 2008, the Company established an allowance in the amount of $1.5million for all amounts due from SemGroup.

Other Current Assets

Other Current Assets
	12 Months Ended Dec. 31, 2009 USD / shares
Other Current Assets	5.Other Current Assets Other current assets consist of the following (in thousands): December31, 2009 2008 Prepaid insurance $ 7,627 $ 9,374 Deposits 7,499 26,806 Prepaid drilling 1,804 2,657 Other 3,650 2,570 Total other current assets $ 20,580 $ 41,407

Property, Plant and Equipment

Property, Plant and Equipment
	12 Months Ended Dec. 31, 2009 USD / shares
Property, Plant and Equipment	6.Property, Plant and Equipment Property, plant and equipment consist of the following (in thousands): December31, 2009 2008 Natural gas and oil properties: Proved $ 5,913,408 $ 4,676,072 Unproved 281,811 215,698 Total natural gas and oil properties 6,195,219 4,891,770 Less accumulated depreciation, depletion and impairment(1) (4,223,437 ) (2,369,840 ) Net natural gas and oil properties capitalized costs 1,971,782 2,521,930 Land 13,937 11,250 Non natural gas and oil equipment(2) 594,132 764,792 Buildings and structures 78,584 71,859 Total 686,653 847,901 Less accumulated depreciation, depletion and amortization (224,792 ) (194,272 ) Net capitalized costs 461,861 653,629 Total property, plant and equipment $ 2,433,643 $ 3,175,559 (1) Includes cumulative full cost ceiling limitation impairment charges of $3,548.3 million and $1,855.0million at December31, 2009 and 2008, respectively. See Note 8. (2) Includes capitalized interest of approximately $3.8 million at both December31, 2009 and 2008. In June 2009, the Company completed the sale of its gathering and compression assets located in the Pion Field and the sale of its deep drilling rights in East Texas. In May 2008, the Company completed the sale of all its assets located in the Piceance Basin of Colorado. See Note 2. The average rates used for depreciation and depletion of natural gas and oil properties were $1.68 per Mcfe in 2009 and $2.87 per Mcfe in 2008. Costs Excluded from Amortization Costs associated with unproved properties of $281.8million as of December31, 2009 were excluded from amounts subject to amortization. The following table summarizes the costs related to unproved properties which have been excluded from natural gas and oil properties being amortized at December31, 2009 and the year in which they were incurred (in thousands): Excluded Costs at December31, 2009 Year Cost Incurred 2006 2007 2008 2009 Property acquisition $ 175,369 $ $ 34,714 $ 65,125 $ 275,208 Exploration 6,603 6,603 Development Capitalized interest Total costs incurred $ 175,369 $ $ 34,714 $ 71,728 $ 281,811 The Company expects to complete the majority of the evaluation activities within six years from the applicable date of acquisition, contingent on the Companys capital expenditures and drilling program. In addition, the Companys internal engineers evaluate all properties on at least an annual basis.

Investments

Investments
	12 Months Ended Dec. 31, 2009 USD / shares
Investments	7.Investments During 2009, the Company had the following investments it accounted for under the equity method. Grey Ranch, L.P.GRLP is a limited partnership that operates the Grey Ranch Plant located in Pecos County, Texas. The Company has long-term operating and gathering agreements with GRLP. The Company purchased its 50% ownership in GRLP during 2003. Income or losses of GRLP are allocated to the partners based on their ownership percentage. Any operating or cash shortfalls for GRLP require contributions from the partners. During October 2009, the Company executed amendments to certain agreements related to the ownership and operation of GRLP. As a result of these amendments, the Company became the primary beneficiary of GRLP. The Company previously accounted for its ownership interest in GRLP using the equity method of accounting; however, due to this change, the Company began consolidating the activity of GRLP in its consolidated financial statements prospectively beginning on the effective date of the amendments, October1, 2009. The change from equity method accounting to the consolidation of GRLP activity had no effect on the Companys net income. The ownership interest not held by the Company is presented as noncontrolling interest in the consolidated financial statements. As of December31, 2009, the Companys consolidated balance sheet included $16.0 million of net property, plant and equipment and $10.0 million of noncontrolling interest related to GRLP. Although GRLP is included in the Companys consolidated financial statements, the Companys interest in GRLPs assets is limited to its 50% ownership. GRLPs creditors have no recourse to the general credit of the Company. At December31, 2008, the Companys investment in GRLP was accounted for under the equity method. The Companys 50% ownership in GRLP totaled approximately $6.1million and was classified as an investment in the accompanying consolidated balance sheets at December31, 2008. 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 formed in 2006 to acquire drilling rigs and provide land drilling services, and, until such time, Lariat operated the rigs owned by Larclay. 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. The Company fully impaired both the investment in and notes receivable due from Larclay at December31, 2008. See Note 8 for discussion of this impairment. There were no additional losses on Larclay during the year ended December31, 2009 or as a result of the Larclay Assignment.

Impairment

Impairment
	12 Months Ended Dec. 31, 2009 USD / shares
Impairment	8.Impairment Full Cost Ceiling Limitation. Under the full cost method of accounting, the net book value of natural gas and 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 oil properties, excluding future cash outflows associated with settling asset retirement obligations included in the net book value of natural gas and oil properties, plus the cost of properties not subject to amortization. In calculating future net revenues for the year ended December31, 2009, prices and costs used are based on the most recent 12-month average. Prior to December31, 2009, prices and costs used to calculate future net revenues were based on prices on the last day of the 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. The net book value, less related deferred tax liabilities, is compared to the ceiling limitation on both 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 oil prices may have increased the ceiling limitation in the subsequent period. During the first quarter and the fourth quarter of 2009, the Company reduced the carrying value of its natural gas and oil properties by $1,304.4million and $388.9 million, respectively, due to a full cost ceiling limitation. Due to the Companys full valuation allowance, there was no tax effect on the full cost ceiling impairments taken in 2009. During the fourth quarter of 2008, the Company reduced the carrying value of its oil and gas properties by $1,855.0million due to a full cost ceiling limitation. The after-tax effect of this reduction in 2008 was $1,677.5million. Other Property, Plant and Equipment.The Company recorded a $10.0 million impairment in the fourth quarter of 2009 on its spare parts inventory due to a decline in market value. The inventory was classified as fixed assets due to the Companys intent to place the parts into service in the future. Also in the fourth quarter of 2009, the Company recorded a $3.9 million impairment on three buildings located on its downtown Oklahoma City campus. The Company has determined these buildings will not have use or value in the future. Larclay, L.P.During 2008, Larclay experienced cash shortfalls as a result of its principal payments due pursuant to its rig loan agreement. As permitted under the Larclay partnership agreement, Lariat provided loans to Larclay to offset the cash shortfalls. At December31, 2008, the notes outstanding to Larclay and related interest receivable were $7.5million and $0.2million, respectively. With the significan

Restricted Deposits

Restricted Deposits
	12 Months Ended Dec. 31, 2009 USD / shares
Restricted Deposits	9. Restricted Deposits Restricted deposits represent bank trust and escrow accounts required by the Minerals Management Service of the United States Department of the Interior, surety bond underwriters, purchase agreements or other settlement agreements to satisfy the Companys eventual responsibility to plug and abandon wells and remove structures when certain offshore fields are no longer in use. During 2008, the Company deposited $0.8million in escrow accounts. There were no deposits to the escrow accounts in 2009.

Accounts Payable and Accrued Ex

Accounts Payable and Accrued Expenses
	12 Months Ended Dec. 31, 2009 USD / shares
Accounts Payable and Accrued Expenses	10. Accounts Payable and Accrued Expenses Trade accounts payable and accrued expenses consist of the following (in thousands): December31, 2009 2008 Accounts payable $ 134,212 $ 302,407 Convertible perpetual preferred stock dividends 8,813 Payroll and benefits 18,270 20,703 Drilling advances 4,985 4,074 Settlement agreementcurrent (See Note13) 5,000 5,000 Accrued interest 31,382 26,790 Other 386 7,363 Total trade accounts payable and accrued expenses $ 203,048 $ 366,337

Costs in Excess of Billings

Costs in Excess of Billings (Billings in Excess of Costs Incurred)
	12 Months Ended Dec. 31, 2009 USD / shares
Costs in Excess of Billings (Billings in Excess of Costs Incurred)	11. 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 and sell a CO2 treating plant in Pecos County, Texas (the Century Plant) and associated compression and pipeline facilities for $800.0million. Under this agreement, 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. The Century Plant is expected to be completed in two phases with the start-up of Phase I expected in mid 2010. Upon start-up, the Century Plant 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 production volumes. See Note 18 for discussion of gas volume requirements. 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. Contract gains or losses will be recorded, as development costs within the Companys natural gas and oil properties as part of the full cost pool, when it is determined that a gain or loss will be incurred. At December31, 2009 and 2008, no amounts had been recorded to the full cost pool in anticipation of probable and estimable gains or losses. Costs in excess of billings were $12.3million and were reported as a current asset in the accompanying consolidated balance sheet at December31, 2009. Billings in excess of costs incurred were $14.1million and were reported as a current liability in the accompanying consolidated balance sheet at December31, 2008.

Long-Term Debt

Long-Term Debt
	12 Months Ended Dec. 31, 2009 USD / shares
Long-Term Debt	12.Long-Term Debt Long-term obligations consist of the following (in thousands): December31, 2009 2008 Senior credit facility $ $ 573,457 Other notes payable: Drilling rig fleet and related oil field services equipment 17,375 33,030 Mortgage 17,952 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 $14,479 discount 351,021 8.0%Senior Notes due 2018 750,000 750,000 8.75% Senior Notes due 2020, net of $7,410 discount 442,590 Total debt 2,578,938 2,375,316 Less: Current maturities of long-term debt 12,003 16,532 Long-term debt $ 2,566,935 $ 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 $850.4million at December31, 2009. The senior credit facility matures on November21, 2011 and is available to be drawn on subject to limitations based on its terms and certain financial covenants, as 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 at each quarter end 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 at each quarter end 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 at each quarter end. 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 and during the year ended December31, 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

Other Long-Term Obligations

Other Long-Term Obligations
	12 Months Ended Dec. 31, 2009 USD / shares
Other Long-Term Obligations	13.Other Long-Term Obligations Pursuant to 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 principal increments. The current portion of the unpaid settlement of $5.0 million was included in accounts payable-trade in the accompanying consolidated balance sheets at December31, 2009 and December31, 2008. The non-current unpaid settlement amounts of $5.0million and $10.0 million have been included in other long-term obligations in the accompanying consolidated balance sheets at December31, 2009 and December31, 2008, respectively.

Derivatives

Derivatives
	12 Months Ended Dec. 31, 2009 USD / shares
Derivatives	14.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 oil. This risk 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 oil sales. None of the Companys derivative contracts may be terminated early as a result of a party having its credit rating downgraded. At December31, 2009 and December31, 2008, the Companys commodity derivative contracts consisted of fixed price swaps and basis swaps, which are described below: Fixedpriceswaps: 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. Basisswaps: 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 Note12 for further discussion of the Companys interest rate swaps. Fair Value of Derivatives.In accordance with ASC Topic 815, the following table presents the fair value of the Companys derivative contracts as of De

Retirement and Deferred Compens

Retirement and Deferred Compensation Plans
	12 Months Ended Dec. 31, 2009 USD / shares
Retirement and Deferred Compensation Plans	15.Retirement and Deferred Compensation Plans Retirement Plan.The Company maintains a 401(k) retirement plan for its employees. Under the plan, eligible employees may elect to defer a portion of their earnings up to the maximum allowed by regulations promulgated by the Internal Revenue Service. The 2009 annual 401(k) deferral limit for employees under age50 was $16,500. Employees turning age50 or over in 2009 could defer up to $22,000 in 2009. The Company makes matching contributions to the plan equal to 100% on the first 15% of employee deferred wages. All matching contributions are made with Company stock. In 2008 and 2007, the Company satisfied its matching obligations related to employee contributions from the respective previous year through transfers of treasury stock. See Note20. For 2009 and 2008, the Company satisfied its matching obligations related to employee contributions with cash purchases of Company stock. For 2009, 2008 and 2007, retirement plan expense was approximately $7.4million, $7.8million and $4.9million, respectively. Deferred Compensation Plan.Effective February1, 2007 the Company established a non-qualified deferred compensation plan that allows eligible highly compensated employees to elect to defer income in excess of the IRA annual limitations on qualified 401(k) retirement plans. The Company makes matching contributions on non-qualified contributions up to a maximum of 15% of employee gross earnings. For 2009 and 2008, employer contributions were approximately $2.5million and $1.6million, respectively. There were no contributions made in 2007. Any assets placed in trust by the Company to fund future obligations of the Companys non-qualified deferred compensation plan are subject to the claims of creditors in the event of insolvency or bankruptcy, and participants are general creditors of the Company as to their deferred compensation in the plan.

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes	16.Income Taxes Deferred income taxes are provided to reflect the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets are reduced by a valuation allowance as necessary when 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. As of December31, 2008, the Company determined it was appropriate to record a full valuation allowance against its net deferred tax asset. For the year ended December31, 2009, the Company recorded a $641.3 million increase to the previously established valuation allowance. The increase is primarily a result of not recording a tax benefit for the current period net loss attributable to the Company before income taxes of $1,784.3 million. Significant components of the Companys deferred tax assets and liabilities are as follows (in thousands): December31, 2009 2008 Deferred tax liabilities: Derivative contracts $ 13,627 $ 85,645 Investment in partnerships 3,770 Total deferred tax liabilities 17,397 85,645 Deferred tax assets: Property, plant and equipment 873,096 555,660 Allowance for doubtful accounts 787 1,414 Net operating loss carryforwards 220,195 2,064 Investment in and notes receivable from partnerships 1,880 Compensation and benefits 9,823 6,911 Alternative minimum tax credits and other carryforwards 3,070 2,524 Asset retirement obligation liability 39,681 4,287 Other 2,570 1,422 Total deferred tax assets 1,149,222 576,162 Valuation allowance (1,131,825 ) (490,517 ) Net deferred tax liability $ $ The (benefits) provisions for income taxes consisted of the following components for the years ended December31 (inthousands): 2009 2008 2007 Current: Federal $ (4,413 ) $ 4,537 $ State (4,303 ) 4,665 601 (8,716 ) 9,202 601 Deferred: Federal (46,180 ) 28,121 State (1,350 ) 802 (47,530 ) 28,923 Total (benefit) provision for income taxes $ (8,716 ) $ (38,328 ) $ 29,524 A reconciliation of the (benefits) provisions for income taxes at the statutory federal tax rate to the Companys actual (benefit) provision for income taxes is as follows for the years ended December31 (in thousands): 2009 2008 2007 Computed at federal statutory rate $ (624,507 ) $ (517,863 ) $ 27,911 State taxes, net of federal benefit (14,265 ) (12,153 ) 912 Non-deductible expenses 1,905 967

Earnings

Earnings (Loss) Per Share
	12 Months Ended Dec. 31, 2009 USD / shares
Earnings (Loss) Per Share	17.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 years ended December31 (in thousands): 2009 2008 2007 Weighted average basic common shares outstanding 175,005 155,619 108,828 Effect of dilutive securities: Restricted stock 1,213 Convertible preferred stock Weighted average diluted common and potential common shares outstanding 175,005 155,619 110,041 For the years ended December31, 2009 and 2008, restricted stock awards covering approximately 2.8million and 1.5million 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 and 6.0% convertible perpetual preferred stock (see Note 20) for the year ended December31, 2009 and with respect to its then outstanding redeemable convertible preferred stock for the years ended December31, 2008 and 2007. 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 was not more dilutive and included preferred stock dividends in the determination of income available to common stockholders for the years ended December31, 2009, 2008 and 2007.

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009 USD / shares
Commitments and Contingencies	18.Commitments and Contingencies Operating Leases.The Company has obligations under noncancelable operating leases, primarily for the use of office space. Total rental expense under operating leases for the years ended December31, 2009, 2008 and 2007 was approximately $3.2million, $2.4million and $2.3million, respectively. Future minimum lease payments under noncancelable operating leases (with initial lease terms in excess of one year) as of December31, 2009 were as follows (in thousands): Years ending December31: 2010 $ 2,043 2011 827 2012 292 2013 158 2014 48 $ 3,368 Rig Commitments.The Company has contracts with third-party drilling rig operators for the use of their rigs at specified day rates. These commitments are not recorded in the consolidated balance sheets. Minimum future commitments as of December31, 2009 were $1.2million for 2010. Purchase Commitment.The Company has a contract to purchase pipe for use in its drilling and production activities. This commitment is not recorded in the consolidated balance sheet. Minimum future commitments as of December31, 2009 were $21.6 million for 2010. Firm Transportation.The Company has subscribed firm gas transportation service under two Transportation Service Agreements (TSA). The TSA terms run through 2012 on the Oasis Pipeline and through 2018 on the Midcontinent Express Pipeline. These commitments are not recorded in the consolidated balance sheets. Under the terms of the TSAs, the Company is obligated to pay a demand charge and in exchange, obtains the right to flow natural gas production through these pipelines to more competitive marketing areas. The amounts of the required payments for firm transportation as of December31, 2009 were as follows (in thousands): Years ending December31: 2010 $ 35,307 2011 30,391 2012 30,612 2013 24,725 2014 16,483 Thereafter 65,979 $ 203,497 Gas Gathering Agreement.In conjunction with the sale of the gathering and compression assets located in the Pion Field of the WTO, the Company entered into a gas gathering agreement. Under the gas gathering agreement, the Company has dedicated its Pion Field acreage for priority gathering services over a period of 20 years and the Company will pay a fee that was negotiated at arms length for such services. Pursuant to the gas gathering agreement, the base fee can be reduced if certain criteria are met. The table below presents the base fee contractual obligations under this agreement as of December31, 2009 (in thousands). Years ending December31: 2010 $ 22,226 2011 33,780 2012 42,814 2013 42,634 2014 42,360 Thereafter 305,390 $ 489,204 Litigation.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

Redeemable Convertible Preferre

Redeemable Convertible Preferred Stock
	12 Months Ended Dec. 31, 2009 USD / shares
Redeemable Convertible Preferred Stock	19. Redeemable Convertible Preferred Stock In November 2006, the Company sold 2,136,667shares of redeemable convertible preferred stock to finance a portion of the NEG acquisition and received net proceeds of approximately $439.5 million after deducting offering expenses of approximately $9.3 million. 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 10.0 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): Declared Dividend Period Dividends per Share Total Payment Date January31, 2007 November21,2006February1,2007 $ 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 November1,2007 4.10 8,956 November 15, 2007 December16, 2007 November2,2007 February1,2008 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 526,316 shares of common stock into 47,619 shares 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 the period from May2, 2008 to the date of conversion (May7

Equity

Equity
	12 Months Ended Dec. 31, 2009 USD / shares
Equity	20. Equity Preferred Stock The following table presents information regarding the Companys preferred stock (in thousands): December31, 2009 December31, 2008 Shares authorized 50,000 50,000 Shares outstanding at end of period: 8.5% Convertible perpetual preferred stock 2,650 6.0% Convertible perpetual preferred stock 2,000 The Company is authorized to issue 50,000,000shares of preferred stock, $0.001par value, of which 4,650,000shares are designated as convertible perpetual preferred stock at December31, 2009. There were no shares of preferred stock outstanding as of December31, 2008. See Note 19 for discussion of conversion of redeemable preferred stock during 2008. 8.5% Convertible perpetual preferred stock.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 based on an initial conversion price of $8.01, 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. Approximately $8.4 million in unpaid dividends on the 8.5% convertible perpetual preferred stock has been included in the Companys earnings per share calculations for the year ended December31, 2009 as presented in the accompanying consolidated statements of operations. The 8.5% 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. 6.0% Convertible perpetual preferred stock.In December 2009, the Company completed a private placement of 2,000,000 shares of 6.0% convertible perpetual preferred stock to an institutional investor in a transaction exempt from registration under Regulation D under the Securities Act. Net proceeds were approximately $199.9 million and were used to fund a portion of the purchase of natural gas and oil properties from Forest during December 2009 and for general corporate purposes. Each share of the 6.0% convertible perpetual preferred stock has a liquidation pref

Related Party Transactions

Related Party Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Related Party Transactions	21.Related Party Transactions The Company enters into transactions in the ordinary course of business with certain of its stockholders and other related parties. These transactions primarily consist of purchases of gas treating services and drilling equipment and sales of oil field services and natural gas. Following is a summary of all significant transactions with such related parties for years ended December31 (in thousands): 2009 2008 2007 Sales to and reimbursements from related parties $ 7,304 $ 90,170 $ 118,631 Purchases of services from related parties $ 21,745 $ 59,951 $ 77,555 In 2007, the Company purchased leasehold acreage from a partnership controlled by a director. The purchase price was approximately $8.3million, which was paid in cash. Also in 2007, the Company purchased certain producing well interests from a director. The purchase price was approximately $3.5million, which was paid in cash. In 2008, the Company purchased certain working interests and related reserves in Company wells owned by its Chairman and Chief Executive Officer and certain of his affiliates. The purchase price was $67.3million. See Note2. Oklahoma City Thunder Agreements.The Companys Chairman and Chief Executive Officer owns a minority interest in a limited liability company which owns and operates the Oklahoma City Thunder, a National Basketball Association team playing in Oklahoma City, where the Company is headquartered. The Company is party to a five-year sponsorship agreement whereby it pays approximately $3.3 million per year for advertising and promotional activities related to the Oklahoma City Thunder. Additionally, the Company entered into an agreement to license a suite at the arena where the Oklahoma City Thunder plays its home games. Under this four-year agreement, the Company will pay an annual license fee of $0.2 million. Larclay, L.P.As previously discussed in Note 8, Lariat owned a 50% interest in Larclay until April15, 2009. At that time, Lariat assigned its interest in Larclay to CWEI. The following table summarizes the Companys transactions with Larclay for the period from January1, 2009 through April15, 2009 and for the years ended December31, 2008 and 2007 (in thousands): 2009 2008 2007 Sales to and reimbursements from Larclay $ 3,125 $ 42,757 $ 53,256 Purchases of services from Larclay $ 1,762 $ 34,747 $ 33,297

Subsequent Events

Subsequent Events
	12 Months Ended Dec. 31, 2009 USD / shares
Subsequent Events	22.Subsequent Events Events occurring after December31, 2009 were evaluated to ensure that any subsequent events that met the criteria for recognition and/or disclosure in this report have been included.

Business Segment Information

Business Segment Information
	12 Months Ended Dec. 31, 2009 USD / shares
Business Segment Information	23.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 oil properties. The drilling and oil field services segment is engaged in the land contract drilling of natural gas and 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): Explorationand Production DrillingandOil Field Services MidstreamGas Services AllOther Consolidated Total Year Ended December31, 2009 Revenues $ 457,397 $ 225,227 $ 299,580 $ 30,654 $ 1,012,858 Inter-segment revenue (261 ) (201,641 ) (215,667 ) (4,245 ) (421,814 ) Total revenues $ 457,136 $ 23,586 $ 83,913 $ 26,409 $ 591,044 Operating loss(1) $ (1,488,078 ) $ (15,166 ) $ (36,989 ) $ (64,791 ) $ (1,605,024 ) Interest expense, net (180,856 ) (2,074 ) (1,246 ) (1,140 ) (185,316 ) Other income, net 4,673 3,365 254 8,292 Loss before income taxes $ (1,664,261 ) $ (17,240 ) $ (34,870 ) $ (65,677 ) $ (1,782,048 ) Capital expenditures(2) $ 555,809 $ 4,090 $ 52,425 $ 32,818 $ 645,142 Depreciation, depletion and amortization $ 178,783 $ 28,221 $ 5,496 $ 14,392 $ 226,892 At December31, 2009 Total assets $ 2,313,582 $ 229,507 $ 110,757 $ 126,471 $ 2,780,317 Year Ended December31, 2008 Revenues $ 912,716 $ 434,963 $ 688,071 $ 22,791 $ 2,058,541 Inter-segment revenue (220 ) (387,972 ) (483,933 ) (4,602 ) (876,727 ) Total revenues $ 912,496 $ 46,991 $ 204,138 $ 18,189 $ 1,181,814 Operating (loss) income(1) $ (1,263,249 ) $ (5,393 ) $ 2,087

Condensed Consolidating Financi

Condensed Consolidating Financial Information
	12 Months Ended Dec. 31, 2009 USD / shares
Condensed Consolidating Financial Information	24.Condensed Consolidating Financial Information The Company provides condensed consolidating financial information for its subsidiaries that are guarantors of its registered debt. The 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 oil related assets and accompanying liabilities to one of its wholly owned guarantor subsidiaries, leaving it with no natural gas or 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 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 December31, 2009 Parent Company Guarantor Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 339 $ 7,522 $ $ 7,861 Accounts receivable, net 642,317 239,719 (776,560 ) 105,476 Derivative contracts 105,994 105,994 Other current assets 36,633 36,633 Total current assets 642,656 389,868 (776,560 ) 255,964 Property, plant and equipment, net 2,433,643 2,433,643 Investment in subsidiaries 1,813,887 (1,813,887 ) Other assets 49,103 41,607 90,710 Total assets $ 2,505,646 $ 2,865,118 $ (2,590,447 ) $ 2,780,317 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued expenses $ 159,693 $

Supplemental Information on Oil

Supplemental Information on Oil and Gas Producing Activities
	12 Months Ended Dec. 31, 2009 USD / shares
Supplemental Information on Oil and Gas Producing Activities	25.Supplemental Information on Oil and Gas Producing Activities The Supplementary Information on Oil and Gas Producing Activities is presented as required by ASC Topic 932, Extractive Activities Oil and Gas. The supplemental information includes capitalized costs related to oil and gas producing activities; costs incurred in oil and gas property acquisition, exploration and development; and the results of operations for oil and gas producing activities. Supplemental information is also provided for oil and gas production and average sales prices; the estimated quantities of proved oil and gas reserves; the standardized measure of discounted future net cash flows associated with proved oil and gas reserves; and a summary of the changes in the standardized measure of discounted future net cash flows associated with proved oil and gas reserves. Capitalized Costs Related to Oil and Gas Producing Activities The Companys capitalized costs consisted of the following (in thousands): December31, 2009 2008 2007 Natural gas and oil properties: Proved $ 5,913,408 $ 4,676,072 $ 2,848,531 Unproved 281,811 215,698 259,610 Total natural gas and oil properties 6,195,219 4,891,770 3,108,141 Less accumulated depreciation, depletion and impairment (4,223,437 ) (2,369,840 ) (230,974 ) Net natural gas and oil properties capitalized costs $ 1,971,782 $ 2,521,930 $ 2,877,167 Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Costs incurred in oil and gas property acquisition, exploration and development activities which have been capitalized are summarized as follows (in thousands): 2009 2008 2007 Acquisitions of properties: Proved $ 749,070 $ 366,275 $ 303,282 Unproved 67,731 16,982 Exploration(1) 126,345 391,672 361,973 Development 407,409 1,132,078 485,348 Total cost incurred $ 1,350,555 $ 1,907,007 $ 1,150,603 (1) Includes seismic costs of $6.8 million, $68.8million and $38.6million for 2009, 2008 and 2007, respectively. 2009 and 2008 amounts also include pipe inventory costs of $77.7 million and $47.2million, respectively. Results of Operations for Oil and Gas Producing Activities (Unaudited) The Companys results of operations from oil and gas producing activities for each of the years 2007, 2008 and 2009 are shown in the following table (in thousands): For the Year Ended December31, 2007 Revenues $ 477,612 Expenses: Production costs 125,749 Depreciation, depletion and amortization expenses 169,392 Total expenses 295,141 Income before income taxes 182,471 Provision for income taxes 65,690 Results of operations for oil and gas producing activities (excluding corporate overhead and interest costs) $ 116,781

Quarterly Financial Results

Quarterly Financial Results (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Quarterly Financial Results (Unaudited)	26.Quarterly Financial Results (Unaudited) The Companys operating results for each quarter of 2009 and 2008 are summarized below (in thousands, except per share data). First Quarter Second Quarter Third Quarter Fourth Quarter 2009: Total revenues $ 159,013 $ 134,099 $ 134,855 $ 163,077 Loss from operations(2) $ (1,116,280 ) $ (49,987 ) $ (50,229 ) $ (388,528 ) Net loss(2) $ (1,154,854 ) $ (91,170 ) $ (101,312 ) $ (425,996 ) Loss applicable to SandRidge Energy, Inc., common stockholders(2) $ (1,154,857 ) $ (91,174 ) $ (104,132 ) $ (434,240 ) Net loss per share applicable to SandRidge Energy, Inc., common stockholders(1): Basic $ (7.07 ) $ (0.52 ) $ (0.58 ) $ (2.36 ) Diluted $ (7.07 ) $ (0.52 ) $ (0.58 ) $ (2.36 ) 2008: Total revenues $ 269,086 $ 378,050 $ 334,023 $ 200,655 (Loss) income from operations(2) $ (62,811 ) $ (11,795 ) $ 401,287 $ (1,664,828 ) Net (loss) income(2) $ (55,790 ) $ (20,327 ) $ 230,348 $ (1,594,656 ) (Loss) income (applicable) available to SandRidge Energy, Inc., common stockholders(2) $ (66,207 ) $ (26,993 ) $ 230,346 $ (1,594,658 ) Net (loss) income per share (applicable) available to SandRidge Energy, Inc., common stockholders(1): Basic $ (0.47 ) $ (0.17 ) $ 1.41 $ (9.78 ) Diluted $ (0.47 ) $ (0.17 ) $ 1.40 $ (9.78 ) (1) Income (loss) per share available (applicable) to common stockholders for each quarter is computed using the weighted-average number of shares outstanding during the quarter, while earnings per share for the fiscal year is computed using the weighted-average number of shares outstanding during the year. Thus, the sum of income (loss) per share available (applicable) to common stockholders for each of the four quarters may not equal the fiscal year amount. (2) Includes a full cost ceiling impairment of $388.9 million, $1,304.4 million and $1,855.0 million for the fourth quarter of 2009, first quarter of 2009 and fourth quarter of 2008, respectively.

Document Information

Document Information
	12 Months Ended Dec. 31, 2009 USD / shares
Document Type	10-K
Amendment Flag	false
Document Period End Date	2009-12-31

Entity Information

Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Feb. 19, 2010	Jun. 30, 2009
Trading Symbol	SD
Entity Registrant Name	SANDRIDGE ENERGY INC
Entity Central Index Key	0001349436
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		210,413,896
Entity Public Float			$1,000,000,000