+ Watch SD
on My Watchlist
The company engages in the exploration, development, and production of oil and gas properties.
Market value of reserves double share price.
new management, not paying tom wards hefty price.
New management, maybe it will improve?
looking like a good value
New management has already started to transfer the profits to the shareholders rather than internally
Cooperman on CNBC thinks it is going to 10. I guess they may be sitting on a big oil/gas field.
Bought IRL at 5.05. Based on return and expected profits, I see at $9+/share by 2016.
SandRidge is ready for a major comeback.
Right place, right time
Things are still not clear with them, but I think it is worth a ride at this price. JMO and worth exactly what I am charging for it.
Long term pick.
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!
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.
There is value in the company once they spend more time developing their assets. Ditching Tom Ward is also a plus
This bad boy goes higher without their crocked CEO WARD - Bye Bye
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 Segments1. Exploration and Productiona. Mid-Continent (Oklahoma + Kansas), Gulf of Mexico, Permian Basin, Otheri. ~500/565 MMBoe come from Mid-Continent and Permian Basinii. 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 20131. 71% of the company’s energy production comes from natural gas2. Drilling and Oil Field Servicesa. 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 20103. Midstream Servicesa. 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 2012Value 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 SandRidgei. Plans to cut costs—slash director pay by 1/3 ii. Install competent management—accuses current management for strategic blunders and poor governanceb. 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 McClendonc. 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 AOLRisks1. Biggest One: CEO Tom Ward does not step down/ the 4 new successors are incompetenta. 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 to2. Debt. a. Total debt of $3.19b, but has a current ratio of 2.29. At least bankruptcy wouldn’t be a pressing concernb. 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 technologyi. 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 payments3. Wells lack geographic diversityBig Few1. 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 payments2. 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?
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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