SandRidge Energy Inc. emerged from bankruptcy protection Tuesday, shedding $3.7 billion in its reorganization, the company said.
The Oklahoma City-based oil and natural gas producer now has zero net debt and more than $500 million in liquidity. Eliminating the debt saves the company about $300 million a year in interest payments.
"We can focus now on creating value through safe and efficient oil and gas operations without the debt burden we've had in the past," CEO James Bennett said in an interview with The Oklahoman.
SandRidge filed for bankruptcy protection on May 16, citing high debt and low commodity prices. Judge David R. Jones last month approved the negotiated reorganization plan after it received "overwhelming" support from SandRidge's lenders.
Under the plan, $3.7 billion in debt was converted to equity in the newly reorganized company. SandRidge's 7 percent and 8.5 percent convertible perpetual preferred stock and all common stock is canceled.
The newly reorganized company's common stock began trading on the New York Stock Exchange on Tuesday under SandRidge's former ticker symbol of "SD." Trading opened at $25 a share late Tuesday afternoon at closed at $19.50 in light trading.
"We need now to get back in front of investors and help them understand the story, what we're doing as a company and why," Bennett said. "We have to prove to shareholders and stakeholders that we can execute from here."
SandRidge has about 630 employees, including 350 at its Oklahoma City headquarters. The count is down from 1,157 companywide and 548 in Oklahoma City at the end of 2015.
"We're still a material employer in Oklahoma," Bennett said. "We're committed to the state and to Oklahoma City."
SandRidge over the past year has sold the Braniff office building next door to its headquarters along with other properties. The company tried to sell its headquarters tower with a plan to lease back the space it needed, but executives withdrew the offer earlier this year.
“We have no plans to re-market the building or the real estate, but, of course, everything is for sale all the time,” Bennett said. “But right now we have no plans to divest the headquarters tower. We plan to stay here for now.”
SandRidge controls about 650,000 acres of northwest Oklahoma's Mississippi Lime and about 136,000 acres in Colorado's Niobrara Shale.
“We are going forward with a strong and unlevered balance sheet,” Bennett said.
“We have very competitive returns on our Mid-Continent program plus portfolio diversification upside and long-term oil growth in Colorado,” Bennett said.
In the first half of 2016, SandRidge drilled 18 laterals in Oklahoma and Kansas, bringing 26 laterals online.
The company has drilled more than 1,600 horizontal wells in the area since 2010. SandRidge often uses multilaterals in the area, drilling two to four horizontal laterals from a single vertical wellbore.
“We're generating cash flow from our Mississippi Lime assets and are studying new and exciting zones, particularly in the southern part of the acreage,” Bennett said.
SandRidge also is developing 136,000 acres in Colorado's Niobrara Shale, which the company bought in late 2015 for $190 million. SandRidge has used one rig to drill 11 wells so far this year.
The company recently halted the drilling program while it studies data from the completed wells.
“We anticipate picking a rig back up in early 2017 and expect to run all or part of 2017 to continue to test and delineate and develop that asset,” Bennett.
Like the Mississippi Lime, the Niobrara is oil-rich and can be drilled with horizontal wells up to two miles long, he said “At some time in a better commodity price environment, we will go into our full development plan,” Bennett said. “Next year will be focused on all long laterals.”
While both plays produce more oil than natural gas, the Mississippi Lime also produces far more ancient saltwater per barrel of oil than most other formations throughout the country. SandRidge has spent millions of dollars over the past decade building up a pipeline and disposal infrastructure designed to pump the saltwater deep underground.
Saltwater disposal wells have been connected to the state's earthquake swarm. Many of Sand- Ridge's disposal wells are included in new Oklahoma Corporation Commission regulations that over the past year have required reduced disposal volumes in response to the seismic activity.
“It has impacted us somewhat. It's caused us to change our drilling program in Oklahoma and drill some formations away from the Mississippi Lime,” Bennett said.
“Our production deferments from the (disposal) curtailments have been minimal. We have a very good relationship with the Corporation Commission on both managing volume reduction and advancing the science on this topic,” Bennett said.
SandRidge earlier this year gave the commission and the Oklahoma Geological Society control of four of its Mississippi Lime disposal wells for pressure and seismicity tests.
SandRidge also has plugged back some of its disposal wells causing them to pump water into shallower rock layers not connected to the earthquake activity.
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