Sandridge Energy, Inc. · NYSE:SD
Sandridge Energy — Proxy Contest (May 2018)
38 slides from Sandridge Energy's proxy contest presentation, May 29, 2018
Slide 1: Shareholder Discussion Materials
Shareholder Discussion Materials May 2018 Exhibit 99.2
Slide 2: Forward-looking statements
This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are not based on historical facts and express a belief, expectation or intention a
Slide 3: Executive Summary: SandRidge Continues to Deliver for Shareholders
SandRidge Energy, Inc. NYSE: SD Executive Summary SandRidge Continues to Deliver for Shareholders Delivered or over-delivered on production and cost guidance for 2017 Increased proved reserves 8% in 2017, with a 130% reserve replacement ratio On target to achieve 50% reduction in G&A since emergence
Slide 4: Board is Committed to Maximizing Shareholder Value
SandRidge Energy, Inc. NYSE: SD SandRidge’s Board is Committed to Maximizing Shareholder Value Continue to improve operating plan Review strategic alternatives for the Company and its assets Thoroughly evaluate all credible acquisition offers Further explore individual asset sales or JV opportunitie
Slide 5: SandRidge Board Has Taken Decisive and Effective Actions
SandRidge Energy, Inc. NYSE: SD Extensive discussion with shareholders regarding strategy, management and governance Transitioned to new management Aligned management compensation with performance Refreshed 40% of board – new members with relevant perspectives/qualifications, including leading / run
Slide 6: Conducting a Thorough, Unbiased Strategic Review
SandRidge Energy, Inc. NYSE: SD Retained RBC Capital Markets to lead strategic review Considering divestment or joint venture opportunities associated with North Park Basin assets, potential corporate and asset combination options and a sale of the Company Developed new long-term financial projectio
Slide 7: The Choice is Clear
SandRidge Energy, Inc. NYSE: SD The Choice is Clear YOUR BOARD RECOMMENDS THE FOLLOWING ACTIONS TO MAXIMIZE SHAREHOLDER VALUE AND RETAIN CONTROL OF YOUR INVESTMENT Vote “FOR” existing directors: Sylvia K. Barnes, Kenneth H. Beer, Michael L. Bennett, William M. Griffin and David J. Kornder. Vote “FOR
Slide 8: Company Overview and Highlights
Company Overview and Highlights
Slide 9: Key Investment Highlights
SandRidge Energy, Inc. NYSE: SD Key Investment Highlights Attractive Valuation ~$500 million market capitalization compared to: $725 million PDP PV-10 (1) $1,009 million total proved PV-10 (1) $60 to $90 million of non oil & gas real estate ~375,000 shares average daily trading volume Trading at 2.5
Slide 10: Distinct Operating Areas Provide Strong Cash Flow & Growth Potential
SandRidge Energy, Inc. NYSE: SD Distinct Operating Areas Provide Strong Cash Flow & Growth Potential Large Portfolio of Oil-Weighted Drilling Opportunities Backed by Strong Cash Flow Base in the Mississippian Mississippian Lime 1Q 2018 Production (MBoe/d | % Liquids) 27.2 | 43% Net Acreage | % HBP 3
Slide 11: Value Proposition: SandRidge Undervalued Relative to Peers
SandRidge Energy, Inc. NYSE: SD Value Proposition SandRidge Undervalued Relative to Peers and Overall Market Announced acquisition of Bonanza Creek Announced termination of Bonanza Creek SandRidge Historical Stock Performance Versus Peers SandRidge EV to PV-10 Value Comparisons (1) Current SandRidge
Slide 12: 2017 Results & Recent Events
2017 Results & Recent Events Solid Financial Performance Exceeds Guidance SandRidge Energy, Inc. NYSE: SD Increasing Reserves & Value SEC PV-10 up 71% YoY Total reserves up 9% YoY Oil Reserves up 17% YoY 19 MMBoe added via drill bit 130% reserve replacement Mid-Continent Commenced initial $100MM tra
Slide 13: General & Administrative Overview
General & Administrative Overview Reduced Cash Expensed G&A by ~46% from 2016 to Current SandRidge Energy, Inc. NYSE: SD G&A Detail Cash Expensed G&A by Category ($MM) Year End G&A Headcount Over Time Adjusted G&A expense is a non-GAAP financial measure defined and, for past periods, reconciled in t
Slide 14: Leadership and organization changes since emergence
SandRidge Energy, Inc. NYSE: SD Since emergence, implemented leadership and organization changes, combined with new strategic objectives focused on organic growth and cash flow margin improvement Delivered or over-delivered on production and cost guidance in 2017 SEC Proved PV10 reserve value increa
Slide 15: Board and Corporate Governance
SandRidge’s Board and Corporate Governance
Slide 16: Corporate Governance Highlights
SandRidge Energy, Inc. NYSE: SD SandRidge Corporate Governance Highlights Governance Highlights SandRidge Shareholder-Friendly Prevalence Among the S&P500 Each Director Elected Annually ü 90% Separate Chairman / CEO ü 48% Majority Voting Standard ü 90% Shareholder Ability to Call Special Meeting ü 6
Slide 17: SandRidge Board is Qualified with the Right Experience
SandRidge Energy, Inc. NYSE: SD Barnes Beer Bennett Griffin Kornder Public Company CEO ü ü E&P Business Leadership ü ü ü Public Company Financial Management / Reporting ü ü ü ü E&P Operations / Technical Experience ü ü Capital Markets / M&A ü ü ü ü Corporate Governance and Other Public Company Direc
Slide 18: Board Overview
SandRidge Board Overview 100% of the SandRidge Independent Board has served two years or less SandRidge Energy, Inc. NYSE: SD Michael L. Bennett Chairman ü Over forty years of technical and managerial experience in the petrochemical industry From 1973 until 2010, Mr. Bennett was an employee of Terra
Slide 19: Reasons for the Short-Term Shareholder Rights Plan
Reasons for the Short-Term Shareholder Rights Plan Shareholder Protection is our Highest Priority SandRidge Energy, Inc. NYSE: SD The short-term rights plan was designed to protect the rights of all SandRidge shareholders Subject to shareholder vote in 3 weeks Protect stockholders from the acquisiti
Slide 20: Investor Engagement Shaping Compensation
SandRidge Energy, Inc. NYSE: SD Investor Engagement Shaping Compensation Increased Emphasis on Shareholder Dialogue and Pay-for-Performance What We Heard What We Did for 2017 What We Are Doing for 2018 2016 compensation was too high. We heard concerns that the size of different compensation elements
Slide 21: Advantages of the Universal Proxy
SandRidge Energy, Inc. NYSE: SD Advantages of the Universal Proxy Best Corporate Governance Practice We adopted the Universal Proxy in order to give shareholders total freedom to pick the 7 best nominees from all candidates up for election Leading proxy advisors ISS and Glass Lewis support its use C
Slide 22: Icahn's Attempt to Gain Control of SandRidge
Icahn’s Attempt to Gain Control of SandRidge
Slide 23: Icahn Is Set on Seizing Control
Icahn Is Set on Seizing Control Icahn Not Open to Discussing Scenarios that Do Not Provide Control SandRidge Energy, Inc. NYSE: SD Icahn initially engaged with SandRidge to block the Company’s transaction with Bonanza Creek and raised concerns regarding the Board and management In response to the co
Slide 24: Icahn's Independent Nominees
SandRidge Energy, Inc. NYSE: SD Icahn’s Independent Nominees SandRidge encourages shareholders to support TWO of Icahn’s independent nominees Icahn Nominees (Principal Occupation) Independence Additional Information John J. "Jack" Lipinski CEO and President and a Director of CVR Energy Age: 67 Indep
Slide 25: Do Not Support Icahn Insiders
SandRidge Energy, Inc. NYSE: SD Do Not Support Icahn Insiders Turning Board Control Over to Icahn is Not in Shareholders’ Best Interest Additional Icahn Nominees (Principal Occupation) Independence Additional Information Jonathan Christodoro Private Investor; Former Managing Director of Icahn Capita
Slide 26: Icahn's Poor Track Record in the Energy Industry
Icahn’s Poor Track Record in the Energy Industry Energy Investments Have Subsequently Led to Value Destruction SandRidge Energy, Inc. NYSE: SD Icahn has arguably destroyed approximately $28Bn of shareholder value in aggregate during Icahn’s involvement in his energy investments After investing appro
Slide 27: Disastrous History of Icahn Energy Investments
Disastrous History of Icahn Energy Investments On aggregate, ~$28Bn(1) of shareholder value was destroyed during Icahn’s Energy Investments SandRidge Energy, Inc. NYSE: SD Sources: SharkRepellent, Activist Insight, Capital IQ, press releases Calculated as sum of market cap differences during Icahn h
Slide 28: Does Icahn Bid for Companies for the Benefit of ALL Shareholders
SandRidge Energy, Inc. NYSE: SD Does Icahn Bid for Companies for the Benefit of ALL Shareholders or Just for His Own? (1) Sources: Public Filings Permissions for quotations neither sought or obtained
Slide 29: Icahn's Contradictory Views on Minority Shareholder Treatment
SandRidge Energy, Inc. NYSE: SD Icahn’s Contradictory Views on Minority Shareholder Treatment(1) Sources: Public Filings Permissions for quotations neither sought or obtained “Going-private transactions are rarely without controversy, but the law is clear: Non-controlling shareholders must be treate
Slide 30: Summary Conclusions
SandRidge Energy, Inc. NYSE: SD Summary Conclusions DO NOT LET ICAHN DISRUPT OUR PROGRESS AND STRATEGIC REVIEW PROCESS AT STOCKHOLDERS’ EXPENSE Sandridge has made significant progress and delivered improved results The Board is refreshed and highly qualified to protect shareholder interests through
Slide 31: Appendix
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Slide 32: Background of engagement with Icahn, December 2017
SandRidge Energy, Inc. NYSE: SD On December 13 and 14, 2017, Mr. J. Bennett, together with David Kornder and William Griffin, independent directors of SandRidge, held a series of meetings with stockholders who collectively owned at the time approximately 26% of the outstanding shares of SandRidge co
Slide 33: Background of engagement with Icahn, March 2018
SandRidge Energy, Inc. NYSE: SD On March 20, 2018, Mr. Griffin and Company advisors had a telephone call with Mr. Icahn and his advisors. Mr. Icahn advised that he wanted the Board to put the Company for sale for cash and that Icahn would be willing to conduct a due diligence review and potential ma
Slide 34: Background of engagement with Icahn, April 2018
SandRidge Energy, Inc. NYSE: SD On April 18, 2018, representatives of the Company had a call with Icahn who expressed an interest in doing due diligence and potentially making an all cash offer for the Company, with an ability to go public with his offer if the Board rejected it. The representatives
Slide 35: Bonanza Creek Merger Analysis
SandRidge Energy, Inc. NYSE: SD Bonanza Creek “BCEI” Merger Analysis The Board’s value thesis has proven sound SandRidge continues to move forward, but since Icahn Capital has consistently faulted our Board for the “highly dilutive” Bonanza Creek deal, it is appropriate to set the record straight. B
Slide 36: Reconciliation of G&A to Adjusted G&A Expense
The Company defines adjusted G&A as general and administrative expense adjusted for certain non-cash stock-based compensation and other non-recurring items, as shown in the following tables. SandRidge Energy, Inc. NYSE: SD Reconciliation of G&A to Adjusted G&A Expense
Slide 37: PV-10 non-GAAP definition
PV-10 is a non-GAAP financial measure and represents the present value of estimated future cash inflows from proved oil, natural gas and NGL reserves, less future development and production costs, discounted at 10% per annum to reflect timing of future cash flows and using 12-month average prices fo
Slide 38: Unrisked 3P development plan proved reserve notes
The proved reserve estimates contained in the unrisked 3P development plan summarized in a Form 8-K furnished to the SEC on May 25, 2018 are based on the Company’s 2017 year-end proved reserve report but differ from Standardized Measure because they have been modified to reflect (i) commodity prices