Sandridge Energy Inc (NYSE:SD)

CAPS Rating: 4 out of 5

The company engages in the exploration, development, and production of oil and gas properties.

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Member Avatar Teacherman1 (51.70) Submitted: 9/25/2014 12:32:13 PM : Outperform Start Price: $4.98 SD Score: -13.36

Down as most E&P companies because of dollar being up, Energy ETFs being shorted, but mostly because the COO left and there is concern as to whether or not his replacement will be able to "navigate the ship" as well.

As long as I am in under $5.00, I am willing to be patient and see how things play out.

They are most definitely not going out of business, and given time, I expect them to work their way back.

Do your own DD, but this is not a bad price for taking at least a small position.

JMO and worth exactly what I am charging for it.

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Member Avatar lectrician (44.42) Submitted: 8/19/2014 12:32:15 PM : Outperform Start Price: $5.23 SD Score: -18.66

Market value of reserves double share price.

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Member Avatar ronjon1957 (< 20) Submitted: 4/18/2014 1:08:15 PM : Outperform Start Price: $6.78 SD Score: -43.03

new management, not paying tom wards hefty price.

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Member Avatar randomvariable (86.69) Submitted: 4/17/2014 3:27:51 PM : Outperform Start Price: $6.76 SD Score: -42.72

New management, maybe it will improve?

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Member Avatar ehabdurzi (77.98) Submitted: 1/9/2014 4:19:45 AM : Outperform Start Price: $5.75 SD Score: -33.39

looking like a good value

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Member Avatar lepera347 (81.74) Submitted: 12/31/2013 1:44:10 PM : Outperform Start Price: $6.00 SD Score: -36.26

New management has already started to transfer the profits to the shareholders rather than internally

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Member Avatar broknrekord3 (46.04) Submitted: 11/8/2013 8:57:32 AM : Outperform Start Price: $5.52 SD Score: -39.49

Bought IRL at 5.05. Based on return and expected profits, I see at $9+/share by 2016.

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Member Avatar DSternSTeq (45.21) Submitted: 10/28/2013 6:06:14 PM : Outperform Start Price: $6.51 SD Score: -46.28

SandRidge is ready for a major comeback.

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Member Avatar GensPT (35.10) Submitted: 9/3/2013 6:48:26 AM : Outperform Start Price: $5.87 SD Score: -57.35

Long term pick.

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Member Avatar mbproduce5 (< 20) Submitted: 8/16/2013 10:05:16 AM : Outperform Start Price: $5.27 SD Score: -38.04

We are past the bottom on SD. This energy producer will do well as it moves past the corrupt management fiasco of last year. Fool on!

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Member Avatar redstater (< 20) Submitted: 7/29/2013 6:57:48 PM : Outperform Start Price: $4.72 SD Score: -8.91

Getting balance sheet and BOD into much better shape. SD is not long for this world as an independent company.

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Member Avatar WCWlooky (23.36) Submitted: 7/27/2013 10:06:14 PM : Outperform Start Price: $5.32 SD Score: -37.21

The increased use of horizontal drilling for the production of Oil and Natural gas liquids will be money makers even if oil prices decline and they will make a lot if prices increase, Increases likely due to the never ending problem in the Middle East. Play the right companies right here in U.S. and cash in.

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Member Avatar chitownjester (92.06) Submitted: 7/22/2013 8:46:41 PM : Outperform Start Price: $5.64 SD Score: -40.88

Watsa

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Member Avatar Chichos (34.27) Submitted: 6/24/2013 12:17:36 PM : Outperform Start Price: $4.76 SD Score: -37.40

There is value in the company once they spend more time developing their assets. Ditching Tom Ward is also a plus

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Member Avatar johnmets32 (95.01) Submitted: 6/21/2013 10:11:56 AM : Outperform Start Price: $4.80 SD Score: -35.89

This bad boy goes higher without their crocked CEO WARD - Bye Bye

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Member Avatar XMFChaodan (77.81) Submitted: 6/18/2013 12:39:41 PM : Outperform Start Price: $4.99 SD Score: -34.29

SandRidge (SD)
Market Cap: 2.42B; P/B: 1.28;
Business in one sentence: SandRidge produces natural gas and oil vertically—from exploration and production to marketing.
3 Business Segments
1. Exploration and Production
a. Mid-Continent (Oklahoma + Kansas), Gulf of Mexico, Permian Basin, Other
i. ~500/565 MMBoe come from Mid-Continent and Permian Basin
ii. Price of both oil has increased ~20% since 2010; price of natural gas decreased by about 37% since 2010—however, note that the price of natural gas has recovered to a bit above $4 since the start of 2013
1. 71% of the company’s energy production comes from natural gas
2. Drilling and Oil Field Services
a. Drills for its own account in northwestern OK, KS, and west TX, as well as drilling on account of other oil and natural gas companies.
i. Allows it to control the cost of drilling and maintain flexibility.
ii. Company performed appr. 69% of its drilling in support of its own exploration and production.
1. Generated $116.6m in revenues performed for third parties in 2012, compared to $28.6m in 2010
3. Midstream Services
a. Provides gathering, compression, and treating services of natural gas in west Texas.
i. Company performed appr. 67% of its midstream services in support if its exploration and production business.
1. Revenues generated from work for third parties decreased from $98.5m in 2010 to $38.8m in 2012
Value Proposition:
1. Activist hedge fund, TPG-Axon, owns 7.3% of shares outstanding and is pushing to replace 4 members of SandRidge’s board of directors, including the removal of CEO Tom Ward.
a. Hedge fund gone activist in trying to release value in SandRidge
i. Plans to cut costs—slash director pay by 1/3
ii. Install competent management—accuses current management for strategic blunders and poor governance
b. Similar situation at Chesapeake Energy (CEO Tom McClendon stepped down late January in large part due to the activism of Carl Icahn) after such accusations. Shares of CHK have recovered ~30% since then
i. Note that Ward cofounded Chesapeake with McClendon
c. Each of the 7 potential directors have held high positions at oil companies such as BP, and El Paso Eastern or currently serve on the boards of major NYSE companies such as Kraft Foods and AOL
Risks
1. Biggest One: CEO Tom Ward does not step down/ the 4 new successors are incompetent
a. If Tom Ward stays, bad things can happen.
i. However, can be ameliorated by the definite presence of 4 new board members who will be unlikely to support the Ward’s behavior that the past board had sycophantically signed on to
2. Debt.
a. Total debt of $3.19b, but has a current ratio of 2.29. At least bankruptcy wouldn’t be a pressing concern
b. On the other hand, the huge load of debt may obstruct the growth of the company in acquiring and developing better oil fields, wells, and technology
i. Pays over 6.5% to borrow, which is about double what its competitors pay for funding—this amounts to an extra $120-150m in annual interest payments
3. Wells lack geographic diversity
Big Few
1. Pays over 6.5% to borrow, which is about double what its competitors pay for funding—this amounts to an extra $120-150m in annual interest payments
2. What is the average oil production per well in Mid-Continent, Gulf of Mexico, and Permian Basin compared to SD’s average oil production per well?
3. Any other redeeming qualities?—If Tom Ward is retained, will SandRidge still have a chance at rebounding?

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Member Avatar ssarran (< 20) Submitted: 5/31/2013 2:22:24 AM : Outperform Start Price: $5.30 SD Score: -39.22

This stock benefits from its deep presence in the Mississippian, as well as recent activist investor activity to reign in management excess. As gas prices recover due to 1. increased demand, 2. decreasing domestic production (peaking last November 2012), and 3. increasing exports to higher priced markets (i.e. Japan, Europe) the bottom line will benefit from higher margins on gas and a lower and more efficient corporate cost structure. The recent focus on the Mississippian is a bit of a gamble, but allows the company to efficiently concentrate its drilling activities to the most productive acreage in that play

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Member Avatar scrabbleguy (54.14) Submitted: 2/21/2013 10:15:04 PM : Outperform Start Price: $5.91 SD Score: -58.36

can 30 stocks randomly picked from a bag of scrabble tiles beat the market? there's only one way to find out.

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Member Avatar kkconway (99.27) Submitted: 1/29/2013 2:27:31 PM : Outperform Start Price: $7.07 SD Score: -70.42

Morningstar pick.

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Member Avatar TMFmd19 (91.95) Submitted: 12/20/2012 7:11:22 AM : Outperform Start Price: $6.46 SD Score: -70.37

Permian sale gives the company the financial flexibility to reinvest in its higher growth Mississippian acres. Cap Ex plans now fully funded through 2014.

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