OKLAHOMA CITY, Nov. 4, 2015 /PRNewswire/ -- SandRidge Energy, Inc. (NYSE: SD) today announced financial and operational results for the quarter ended September 30, 2015. Additionally, presentation slides will be available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Events at 7 am ET on November 5^th.

The Company had a strong operational quarter, and has both increased 2015 production guidance and decreased 2015 lease operating expense guidance due to positive ongoing production and expense results and the acquisition of the Piñon gathering system. The acquisition eliminates approximately $40 million of expenses annually beginning in November 2015.

As previously announced during and after the third quarter, SandRidge bought back $350 million of unsecured notes for $124 million in cash (36% of par value), creating annual interest expense savings of $27 million. In the transactions, the company also exchanged $575 million of unsecured notes into similar notes convertible into approximately 364 shares of SandRidge common stock per $1,000 of par value of the notes.

After the close of the third quarter, SandRidge entered into a purchase and sales agreement to acquire assets from EE3, LLC, a North Park Basin, Colorado producer consisting of 16 wells producing 1.0 MBoepd with 136,000 net acres of Niobrara Shale oil development potential.

"Our third quarter results featured continued cost control, strong operations, and we drilled eight more extended laterals. We also addressed $925 million of debt through bond repurchases at a steep discount to face value, and additional bond exchange agreements reflecting conversion of debt to equity at a very large premium to our recent share price, making these exchanges extremely accretive to shareholders. In October, we created considerable value by acquiring the Piñon gathering system, reducing annual expenses by approximately $40 million." said James Bennett, SandRidge's Chief Executive Officer and President.

"Topping off the significant and varied activity of recent weeks, our $190 million acquisition of assets in Colorado, which we announced today, gives SandRidge entry into the derisked Niobrara Shale oil play. We intend to allocate significant capital there, taking advantage of our medium depth horizontal drilling and infrastructure management skillsets. Combining continued development of our existing Mid-Continent assets with our new high return Niobrara play, we aim to diversify and improve our overall capital efficiencies. We are visibly capturing balance sheet, operational, and acquisition opportunities to enhance our value proposition to investors."

Drilling and Operational Activities

Mid-Continent: During the third quarter of 2015, SandRidge drilled 31 laterals. The Company averaged six horizontal rigs operating in the play. The Company's Mid-Continent assets produced 70.6 MBoepd during the third quarter (30% oil, 19% NGLs, 51% natural gas).

West Texas: During the third quarter, Permian Basin properties produced approximately 4.2 MBoepd (82% oil, 11% NGLs, 7% natural gas). Legacy West Texas Overthrust properties produced approximately 5.1 MBoepd (99% natural gas, 1% oil).

Operational Highlights

• Average third quarter production of 79.9 MBoepd, a 10% decrease versus the second quarter of 2015
• Achieved $2.3 million per Mississippian lateral cost in the third quarter, a $700,000, or 23%, reduction from 2014 per lateral costs
• Spud 14 laterals with multilateral design in the third quarter (8 extended laterals and 6 full section development laterals) with an average cost of $2.2 million per lateral
• 19 single Mississippian laterals delivered an average 30-day IP rate of 447 Boepd (51% oil), 127% of Mississippian type curve in the third quarter
• 101 multilaterals delivered a cumulative average program to date 90-day IP rate of 280 Boepd (52% oil), 100% of Mississippian type curve through the third quarter
• Reduced Mid-Continent annual LOE guidance by $0.80 per Boe primarily due to a reduction in power use and generator rentals

Operational Highlights - Subsequent to Third Quarter

As previously announced, the Company acquired the Piñon gathering system, in connection with its West Texas Overthrust properties. Acquisition of this asset eliminates ~$40 million of annual expenses, beginning in November 2015.

Steve Turk, SandRidge's Chief Operating Officer noted, "The teams delivered strong results averaging 79.9 MBoepd in the third quarter, 70.6 MBoepd from our original Mid-Continent assets. Confidence in our program led to the decision to again raise the lower end of our annual production guidance by 500 MBoe. Ahead of our year end goal, we also achieved an average cost of $2.3 million per Mississippian lateral in the third quarter. New drilling in the quarter consisted of 56% multilaterals from extended lateral development and our improved full section development design, including our first successfully executed 2-mile extended lateral Woodford well. Expanding upon these established capabilities, we are excited about applying the team's proven low cost operations expertise to our newly acquired Niobrara assets in the North Park Basin. We are confident that our experience in medium depth horizontal drilling and our disciplined approach to reducing operating costs will enhance the value of this oily multiple bench shale resource play."

Key Financial Results

Third Quarter

• Adjusted EBITDA, net of Noncontrolling Interest, was $118 million for third quarter 2015 compared to $225 million in third quarter 2014
• Adjusted operating cash flow of $45 million for third quarter 2015 compared to $203 million in third quarter 2014           
• Adjusted net loss of $45 million, or $0.07 per diluted share, for third quarter 2015 compared to adjusted net income of $43 million, or $0.07 per diluted share, in third quarter 2014

Nine Months

• Adjusted EBITDA, net of Noncontrolling Interest, was $460 million in the first nine months of 2015 compared to $596 million in first nine months of 2014, pro forma for divestitures
• Adjusted operating cash flow of $302 million in the first nine months of 2015 compared to $509 million in the first nine months of 2014           
• Adjusted net loss of $61 million, or $0.10 per diluted share, in the first nine months of 2015 compared to adjusted net income of $109 million, or $0.19 per diluted share, in the first nine months of 2014

Adjusted net income (loss) available to common stockholders, adjusted EBITDA, pro forma adjusted EBITDA and adjusted operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under "Non-GAAP Financial Measures" beginning on page 10.

Financial / Other Highlights

• Ended the third quarter with $1.3 billion in liquidity, including $790 million in cash
• Bond repurchases and exchanges address $525 million of total debt, retiring $250 million with $94 million in cash (38% of par value) and exchanging $275 million into debt, convertible into equity
• Suspension of 7.0% semi-annual preferred stock dividend payment
• Incurred a non-cash impairment charge of approximately $1.1 billion primarily due to a ceiling test impairment, resulting from a significant decline in oil price

Financial / Other Highlights – Subsequent to Third Quarter

• Additional bond repurchases and exchanges address $400 million of total debt, retiring $100 million with $30 million in cash (30% of par value) and exchanging $300 million into debt, convertible into equity
• Affirmed $500 million borrowing base and amended credit agreement allowing for an increase in an amount available for cash repurchase of senior unsecured notes from $200 million to $275 million
• As of October 30, 2015, a total principal amount of $126 million in both 2022 and 2023 unsecured convertible notes had voluntarily converted into common stock

Operational and Financial Statistics

Information regarding the Company's production, pricing, costs and earnings is presented below:

Capital Expenditures

The table below summarizes the Company's capital expenditures for the three and nine-month periods ended September 30, 2015 and 2014:

Derivative Contracts

The table below sets forth the Company's consolidated oil and natural gas price swaps and collars for the years 2015 and 2016 as of November 4, 2015:

Balance Sheet

The Company's capital structure at September 30, 2015 and December 31, 2014 is presented below:

Pro Forma Capitalization

The Company's capital structure at September 30, 2015, pro forma for subsequent events and based on par values is presented below:

2015 Operational Guidance

The Company is raising its 2015 production guidance. Additionally, the Company is lowering its LOE, Production Tax and DD&A guidance. Additional 2015 Guidance detail is available on the Company's website, www.sandridgeenergy.com, under Investor Relations/Financial Information/Guidance.

Non-GAAP Financial Measures

Adjusted operating cash flow, adjusted EBITDA, pro forma adjusted EBITDA, adjusted net (loss) income, and adjusted net income attributable to noncontrolling interest are non-GAAP financial measures.

The Company defines adjusted operating cash flow as net cash provided by operating activities before changes in operating assets and liabilities and adjusted for cash paid on financing derivatives. It defines EBITDA as net loss (income) before income tax expense (benefit), interest expense and depreciation, depletion and amortization and accretion of asset retirement obligations. Adjusted EBITDA, as presented herein, is EBITDA excluding asset impairment, interest income,  gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, loss (gain) on sale of assets, legal settlements, severance, oil field services – Permian exit costs, gain on extinguishment of debt and other various items (including non-cash portion of noncontrolling interest and stock-based compensation). Pro forma adjusted EBITDA, as presented herein, is adjusted EBITDA excluding adjusted EBITDA attributable to properties or subsidiaries sold during the period.

Adjusted operating cash flow and adjusted EBITDA are supplemental financial measures used by the Company's management and by securities analysts, investors, lenders, rating agencies and others who follow the industry as an indicator of the Company's ability to internally fund exploration and development activities and to service or incur additional debt. The Company also uses these measures because adjusted operating cash flow and adjusted EBITDA relate to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. Further, adjusted operating cash flow and adjusted EBITDA allow the Company to compare its operating performance and return on capital with those of other companies without regard to financing methods and capital structure. These measures should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Therefore, the Company's adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Management also uses the supplemental financial measure of adjusted net (loss) income, which excludes asset impairment, gain on derivative contracts net of cash received (paid) on settlement of derivative contracts, gain on convertible notes derivative liabilities, loss (gain) on sale of assets, severance, oil field services – Permian exit costs, gain on extinguishment of debt and other non-cash items from loss applicable to common stockholders. Management uses this financial measure as an indicator of the Company's operational trends and performance relative to other oil and natural gas companies and believes it is more comparable to earnings estimates provided by securities analysts. Adjusted net (loss) income is not a measure of financial performance under GAAP and should not be considered a substitute for loss applicable to common stockholders.

The supplemental measure of adjusted net income attributable to noncontrolling interest is used by the Company's management to measure the impact on the Company's financial results of the ownership by third parties of interests in the Company's less than wholly-owned consolidated subsidiaries. Adjusted net income attributable to noncontrolling interest excludes the portion of asset impairment and (gain) loss on derivative contracts net of cash received (paid) on settlement of derivative contracts attributable to third party ownership in less than wholly-owned consolidated subsidiaries from net (loss) income attributable to noncontrolling interest. Adjusted net income attributable to noncontrolling interest is not a measure of financial performance under GAAP and should not be considered a substitute for net (loss) income attributable to noncontrolling interest.  

The supplemental measures of pro forma cash and cash equivalents and pro forma debt as presented herein are cash and cash equivalents and debt adjusted for issuances, repurchases and conversions into common stock of debt subsequent to period end.

The tables below reconcile the most directly comparable GAAP financial measures to operating cash flow, EBITDA and adjusted EBITDA, adjusted net (loss) income available to common stockholders, adjusted net income attributable to noncontrolling interest, pro forma cash and cash equivalents and pro forma debt.