SD - Earnings call transcript Q3 2024 | SandRidge Energy, Inc.

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Operator

Thank you for standing by, and welcome to the SandRidge Energy Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Scott Prestridge, SVP of Finance and Strategy.

You may begin.

Scott Prestridge

Thank you, and welcome, everyone. With me today are Grayson Pranin, our CEO; Jonathan Frates, our CFO; Brandon Brown, our CAO; as well as Dean Parrish, our COO. We would like to remind you that today's call contains forward-looking statements and assumptions, which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. greater guarantees materially performance unknown filings. due uncertainties discussed not results our risks are earnings as differ our may to in statements of our and future actual and release These and in SEC detail known and may EBITDA adjusted other to G&A adjusted financial measures. refer also and We and non-GAAP turn over to Grayson. of can found be call Reconciliations on our the these measures website. With that, I'll

Grayson Pranin

first of flow made company. total August, these assets up Basin. from report Thank closed our you, on to At the translate company's and the averaged for day, liquids quarter contribution XX% From to pleased per the acquisition end good producing and assets. our MBoe reflecting month, a the of we activity Anadarko the on cash in production afternoon. positive approximately free Western of continues I'm the for XX to September,

quarter. Before for expanding touch few a on Jonathan this, the on highlights will

Jonathan Frates

the Thank you, company the natural EBITDA downdraft generated quarter. in Grayson. prices Despite nearly million third in period, adjusted the the of $XX during gas

and that position As income have in flows taxes. and our a is very EBITDA no SandRidge the teeth, federal us metric we that for little yields given out our adjusted unique due debt eye NOL past, no to pointed a from have substantial having we cash

$X shareholders on November November dividend XXXX, per per of XX, for from G&A held declared share year, the various adjusted high-yield on last date approximately and On the cash On November which return the quarter. to I XXXX, an during offset million X, of portion, Directors we $XXX more initiated paid generated to a our XXXX. record approximately cash program dividends income the than $X.XX deposit $X.X million The total of quarter or capital interest XX, nearly of company cumulative accounts, Board payable the of share.

funding company represents cash quarter million, more our including end than of revolving recent within third the which or returns for restricted the held quarter with and barrel stock more debt operations sheet. capital per continues $XX.X issued the cash and our no share Commodity from obligations Mcf the cash, at of than hedges and outstanding. the term on per was expenditures common realizations oil, were gas impact Following of has The acquisition, live debt balance to $X.XX per before of all flow, $XX cash price per cash of capital and flow and of NGLs. $XX.XX $X.XX considering barrel

our was federal As at roughly quarter which billion we large mentioned NOL maintained position, have $X.X end. earlier,

and flows has us position NOL shield taxes. cash to Our will income federal allow continue to from our

yield million continues $X.X Our to to or quarter for the results cost commitment of $X.XX adjusted G&A discipline BOE. per approximately with

we during quarter, ended was $XX continue shareholders. We $XX income share. per our provided or million for generate And period. the $X.XX the net approximately operating basic activities approximately during cash million Net to by

Over which X the in of relative company approximately months flow, million of conversion free cash approximately generated to adjusted XX% rate year, the represents the $XX a first EBITDA.

should our note release will details and operational further provide we financial that outlook, our our on the to during shifting Before performance earnings quarter. and XX-Q

Grayson Pranin

other brief it touching Thank a before useful give be our company I recent update you, on acquisition would Jonathan. to on thought highlights.

We per on first the of XX-day month. day, have later and X standpoint, producing finished production anticipated quick now in the wells with the wells in been in activity XX% completions ducts well Oklahoma and a uncompleted Roger interest as play drilling County of concentrated X Basin acquisition Cherokee As last XX this X,XXX spacing our focused X with an ducts but recently oil. X over IP most a recent recap, as Anadarko in Western Ellis drilled the recent the Mill and completed BOE XX units. From achieving included

provided areas diversifying average Jonathan acquisition at full our liquids. basis and and were rate levels adding a BOE acquired for year as This XX enabling oil asset per achieve positioned opportunities. The rate company has XX base new organic As self-sourcing acquired production to of the X-mile the a assets and basis. contribution across core, being are an quarter. Revenue a flow was to few in we've Northeast and shales The more investigating well comprised laterals XX% on in be average the that roughly program, first day, counties. target benefits The focused this from while of MBoe and month in future and the price we Western on the planned second peak X will last X,XXX July horizontal Texas downward the per optionality SandRidge-operated were execute for together Cherokee to recent wells earlier, on shale This with our return and the producing with over or the new of new a investments, an This quarter the represents and interest activity mix which recorded integrated our to inventory daily evaluate wells XX% Cherokee growth the the to mind XX upgrading approximately company wells encompassing increased in capital XX% of sheet keep codeveloped, details X DSUs for our become these our which with delineated preserving were the Western nearly will Panhandle with the and contributions percentage full is average a the of in our highly have Mills of be through cash productive opportunities, play, area first high had increase production and oil. September sands. developing drilled to provides we highly a offsetting mostly our of daily oil breakevens base currently future completed and helped Roger team first August providing the years. day the the BOE commodity Oklahoma, increase the of balance play assets XX-Q. developed drilling hydrocarbon Please formation be commodity strong while Basin IP that key productive southern assets in porosity second with productive some the play our Anadarko play, of at been $XX in areas mentioned provides bolstering the potential financials WTI, purchase where with synergies in Cherokee also with increasing adjustments newly the recently County, meaning include: of focused QX

assets PDP and with codeveloped north XX included breakeven are an acquisition these X,XXX wells of the to investments. is industry not markets helps was of the years results pair just day substantial under in from old, reserve perspective. Another The are had a core this life XX% the horizontal up. just of connected to wells end per any in purchasers require relatively play the of or oil a which do average assets BOE midstream infrastructure and are new Mid-Con being just few IP

expertise these these over asset base new as endeavored past incumbent operating to we focus integrating with assets. our our low-cost We efficiently to assets on weeks have and implementing have few the

a a expense the associated which prior expanded was from or quarter the X% lease LOE on basis from Our asset for with incremental the BOE quarter the approximately million reduction $X.X base acquisition. $X.XX operating despite is the per BOE,

development for our have we options and capitalize in on only well of a prices We favorable. Long Hub both prices could appropriate kick better and incumbent a of life us environment price a liquids assets short, impacts include near back continue to acquisition, through capital To commodity not our now gas development up, adds provides properties future initiation reserve and developed which price to cycles. multifaceted of mindful Through in The activity, portfolio term to the when potential the balances WTI year. commodity both the positions this commodity the are sum to be program near-term WTI natural and optionality acquisition expanded durability. and diversification, constructive but Henry transaction our allocation. recent and the as current and improving as scenario this for this

back will to I base Now business, to pivoting Dean. over turn things the

Dean Parrish

Grayson. you, Thank

fourth some are meaningful savings to the day hopeful were cost going last did We completions during are on previously later planned recent to were most this see efficiencies come discussed an X had expansion The quarter ducts the of start completed program. a activity third recent and well were our of our oil. X with quarter month. ducts acquisition. were with forward. capital completed timing with BOE over the XX-day and the and X,XXX standpoint, associated during these that per anticipated XX% The leverage Let's ducts online a operated IP the From

base focused we'll and for fluid be In such profile asset we in addition enhancing assets. base existing optimizing asset decline to artificial reduce to flattening The forward-looking will our producing our high level year is expected wells current this utility as production production optimizing profile. benefits our contributed costs, well's value-adding return electrical costs provide decreasing decline the already quarters through in focused have moderating over lift conversion ducts, production from tailored and The costs. the the key systems on to the past on projects installing our future current efforts lowering which further have system, are and program lift and demand that production and our we the that from artificial wells base incumbent of

heel to was from lift heel quarter completions, time. The refracs. optimization piloted completion artificial completion In adding recompletions Xx included has and that we of production addition production last campaign pre-deal successful conversions, our

will added quarter. projects that this X heel additional have executed completion We be

or reduction $X over XX% or higher leasing of to Hub help and These exercise our Cherokee this return cost of center. a breakeven wells opportunities to decreasing next that price at at $XX yet gas will are developments have down boost while effectively a in areas a said, bolster return confident a Our and/or $XX WTI. content more high-grade relative development year. Cherokee and by further productivity development option relative WTI resume incumbent will rates costs Commodity The further from in needed which we remains leasehold pricing commodity approximately levels well reactivations we maintains reasonable preferred over oilier before play, content production, and not firmly Cherokee to increased further futures option in reactivations. With non-Cherokee be Henry over will assets the roughly are and these held well which have center prices to value development time.

successful continued our to $X.X approximately to expenses. million makeovers recent and pressures acquisition shifting well for and integration An to operating prior or were the assets the reduction per LOE quarter. Despite handling approximate capital and water was increased held inflationary newly per expense by lease acquired programs, BOE of count reduced ] to $X.XX costs. BOE. [ quarter Now from driven addition prior This the in X%

to continue of ethane on impacted recovery pricing gas and realizations, stream liquid the the the through ethane and forward. and operation operating between as regards other natural ethane infrastructure, will period moving pricing continues leveraging which actively The be as of time to gas the gas natural recovered natural gas this NGL unknown processes, also and largest company's significant is costs in natural natural bidding at ethane dependent recovery out gas rigorous our company liquids. We duration volumes of press for to purchaser is more price center increased dynamics gas is advantages. In natural pulled on and during quarter, but the

both benchmark quarter, and addition, fixed $X.XX Henry prices, Markets infield sold as also per majority gathering basis. were transportation costs for which Mcf In local gas to by well gas take as to larger is this low impacted the averaged percentage return historical quarter Panhandle our trends. where up which are the is natural Eastern over to realizations a widening the forecasting of Hub

over price the In our the over translating Henry smaller prices. With the of improved fixed higher Grayson. and year, increase to percentage next portion forecasted winter that, and into I'll realizations back deducts difference, with will things of addition, this turn benchmark Hub a of into become

Grayson Pranin

Thank you, Dean.

moment to SandRidge. key a for of pause revisit us Let highlights the

well-understood in base primarily diversified production do region assets Mid-Continent is not held require history, focused the life. fully a Our profile double-digit routine production well and shallowing most These a any flaring are long reserve by set, asset with and PDP gas. of which with produced

substantial well legacy than X,XXX individual over assets operated helps to owned of footprint. and profitability SWD a more our down This electric $XX incumbent include integrated Hub. and for miles infrastructure producing infrastructure and Our Henry and wells each WTI majority our owned $X of derisk

and shareholder acquisition as is cash This increase paths provides after low several value free debt, sheet, perspective include by the buffer, $X.X our flexibility that cash total commitment. realization further G&A a significant yield position, than inventory to quarter financial further subject and and extends diversification end optionality advantage to uses cash Bolstered if to to make provides recent high-graded This benefited million. cycles. capital, in any a commodity generation is take breakevens advantages to allows to of strategic off-balance burden. more flexibility our to business. return that flow continue sheet $XX assets which roughly net net cash and financial $XX a other to or Our value not benefit financial oil with not cash with to organic potential and from proposition grow of balance MVCs robust further down to our to the optionality flexibility approximately Further, the materially adjustments federal our provide NOL. headwinds SandRidge's WTI in areas. Financial by strengthened among derisked us billion company our position, no the other commodity is business of of growth

our seriously growth have a efficient value capital commitment around and of our growing Finally, ESG strategy to highlighting focus responsible, committed them. to manner projects. we our in on while business processes remain that disciplined cash allocating capability organic We prudently it's worth the generation to high-return and safe, take implemented

program. and and vigilant disciplined to return manner consideration planned opportunities merger remain of balance in our of also our capital further sheet We with a acquisition and evaluate commitment

strategy points. has X Our

extending high maximize the to with and incumbent costs. cash on operating flattening assets is production generation pressing of profile well optimization continuously and projects return by our as Mid-Con capacity value and administrative of PDP our First rate production as

of The rates that our capital rate and reinvestment projects opportunities conversion. have while being mindful second prudently burdened free reasonable and high to is to in risk-adjusted exercise fully and flow EBITDA stewardship to targeting invest cash optimize return

assets, of execute since program on and earlier $X.XX of expanded losses continue to shareholders. company acquisition advancement other of yield Board to net that more strategic uses. To complement is of our opportunities than core per share work value third our maximize to responsibilities. dividends end, capital shareholder utilize approximately to company's year. ESG $X could our to we further return maintain competencies, leverage year attractive program in final past The this with uphold Fourth, paid our generate federal of will billion The of otherwise capital bring to returns synergies, this or include staple for optionality with investments value-accretive cash, $X.X opportunities, our the is and per and year as portfolio merger its assess operating the last of our share return this a total to we

production will maintain of that investment while development capital to levels respond forward to we And stewardship look commodity continue to in priority. in capital to Please activity plan financial to or activity flexibility, mind commodity progress and our any capital year, potential these commodity slow prices. to will we oil to our diversification. be order in high our As with program keep exercise our down given help include our projects top downdraft extend further changes return to return expanded our next we with tailwinds. Cherokee in further very anticipate providing

to over Brandon. things turn I'll expenses. administrative to shifting Now

Brandon Brown

the Thank quarter G&A among keep which you, Grayson. million adjusted or leading We BOE, our were is to able $X.X to per peers. for $X.XX

existing G&A remain disciplined quarter. offset We fit our for maintain and the from stands of purpose. adjusted cost values our organization tailored as our to deposits plan to earned core moving for our acquisition the which noted, organization As The have after which metrics. as the mindset well efficiency-focused cost low BOE recent cash prior interest to acquisition, our to cost for efficiency per the our forward include will benefit be initiatives, nearly further

actually reflect administration, outsourced such create We personnel core land the perfunctory operations where led and will to functions IT, accounting, have necessary tax we but and as HR. rating balance continue of field corporate versus more value and to

flow flex structure breakeven projects. over the by have of per key fact, development stock common a Positive option held for share XX% flow area return, of the supported approximately low XX% it of the and which our adjusted and and tax. experience expanded position over our outstanding per prepared G&A for EBITDA skill Thank production which and first XXXX, the $X.XX and prices, future while at net with Given to and of top-tier both $XX $X.XX free remained preserves is potential growing double-digit free base at you institutional $X.X rate summary, rate value quarter. No and and X than approximately issued shield knowledge asset of more production, cash than in in by company conversion the people, represents total cost-effective from position profile cash life a overhead, both that months NOLs, our of manner. more end, cash flow of Mid-Con a leverage. in A high personnel technical reserve federal equivalents activity concludes will and inventory retaining cash cash BOE commodity free that has federal had future of Low time. just million quarter operations. In our XXX of remarks. to consistent debt, a your This billion income ability cash negative efficient flattening sets

open will call the We questions. now to

Operator

May question the comes of Company. from line Your Instructions] from first Kyle [Operator Sidoti &

Kyle May

the you start play and plans the acquisition expand if for activity drilling your asset? we if with wondering latest was could on maybe I Cherokee could

Grayson Pranin

great and in calling Sure, Kyle. I question. appreciate you

[ complete the to And into extend next drilling Dean plans a call. about initiate joint will putting have ] we're together units year. recent plan on on Our that our ducts efficient the talked been to

DSUs, couple we or So have extended X-mile laterals next be that over of the years. XX XX we'll reach developing

Kyle May

you year? Okay. Great. how Any drill many sense of next might

Grayson Pranin

plan to well now partial rig developed year, XX is and can you X days. I our right with every X think drill or a rig

get wells So of a a XX massive year. you in

for be where threshold our that we're So now. would right at

Kyle May

Okay. provide cost to Cherokee details well the Great. play asset? compared and for And any expected legacy about you in follow-up X returns me. your Can the

Grayson Pranin

we're No, on to expand Sure. that. glad

we in which mentioned think, legacy Henry changes today the ratio a the relative of I've more Again, tools the assets WTI economics the Cherokee in gives us just attractive on more the into are for as a in projected capital gassy into in times gas more exercise acquisition can more higher has assets, therefore, WTI this oil that future, lean our is the and future, environment to And kit allocation call, Cherokee given as options development I the between assets commodities, content but on legacy those our as couple constructive, to Hub. nature. but in where can the bag and be assets. And both. can we for purposes lean higher we both favorable is contango in

the there floor that on capital returns are are per sense to $XX the think into going feel barrel to a in give breakeven allocate WTI the to continue and is And enough at. here I up makes we you where is area that I sense mentioned it robust relative next year. the roughly

Operator

participation, Instructions] We for questions. disconnect. we now and thank may no [Operator today's This have And your conclude you conference does further you call.

SandRidge Energy (SD) 7 Nov 242024 Q3 Earnings call transcript