SandRidge Energy, Inc. · NYSE:SD
SandRidge Energy — Barclays CEO Energy-Power Conference 2014
30 slides from SandRidge Energy's conference presentation, September 2014
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Slide 2: Disclaimer: Forward Looking Statement
DISCLAIMER Forward Looking Statement 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 express a belief, expectation or intention an
Slide 3: SandRidge Mission: Premier Mid-Continent Company
SANDRIDGE MISSION Premier Mid‐Continent Company MISSION STATEMENT Our Mission at SandRidge is to create the premier, high-return, growth-oriented, resource conversion company, focused in the Mid-Continent region of the United States. 31
Slide 4: SandRidge Company Overview
SANDRIDGE COMPANY OVERVIEW MARKET VALUE ($ in millions) SD Quick Facts Market Cap (08/29/2014) $2,590 • Fractured Carbonate Focus Net Debt(a) 2,276 • Mid-Continent, Horizontal Preferred Stock 765 Mississippian Leader Enterprise Value $5,370 • Sub-$3.0MM/well, 380 MBoe EUR ASSET OVERVIEW(b)(c) • Stac
Slide 5: Investment Thesis
INVESTMENT THESIS 20+% Production Growth, 30+% EBITDA Refined Business Model Growth & Flattish Capex FOCUSED Strategy, Execution and Culture • Growth program continues to improve are Focused – New zones (Chester, Woodford), New areas (Garfield) COMPETITIVE ADVANTAGE – Better than type curve results
Slide 6: Actionable Growth with Upsides
ACTIONABLE GROWTH WITH UPSIDES FOCUSED 20+% Production Growth, 30+% EBITDA Growth & Flattish Capex Significant Acreage Position Stacked Oily Pay Zones * Improving Already Strong Returns * STRIP 8/1/2014 www.SandRidgeEnergy.com 64
Slide 7: Multi-Year Production Growth
MULTI‐YEAR PRODUCTION GROWTH ACTIONABLE Confidence in Asset Base and Execution GROWTH • Confident in multi-year drilling program • Existing focus area position 2016 Activity provides >4,500 locations • PDP base decline is flattening • Assumes average capital expenditure program of ~$1.55 Bln • Well
Slide 8: Q2'14 Continued Strong Well Results
Q2’14 – CONTINUED STRONG WELL RESULTS RESULTS Focus and Innovation Yield Exceptional Operating Results in the Second Quarter Mississippian Success • 412 Boe/d 30-day IP, 122 laterals (30% above type curve) • 7 laterals over 1,000 Boe/d in 4 counties • Garfield County net production ramped 400% to 5,
Slide 9: Material Well Cost and LOE Reduction
MATERIAL WELL COST AND LOE REDUCTION Mississippian Leader FOCUSED $2.85MM /Well • Record low Q2’14 Drilling and Completion (D&C) lateral costs of $2.85 MM – +$1 MM decrease in capital since Q1 2012 – 97% Electric Submersible Pump (ESP) implementation rate in Q2’14 • Primary D&C cost saving in 2014 l
Slide 10: Targeting Breakout Economics
TARGETING BREAKOUT ECONOMICS INNOVATION Ahead of Schedule, Reducing Well Costs • Already strong well economics improving as costs come down • Breakout innovations on well design could both: – Enhance returns – Expand focus areas • Value enhancing projects in motion – Completion techniques – Sectiona
Slide 11: 2014 Mississippian PUD Type Curve
2014 MISSISSIPPIAN PUD TYPE CURVE Actual Performance Consistently Above Type Curve FOCUSED 350 200 Oil: 118 MBo 30 Day IP (Bo/day) 176 180 1st Year Decline(a) 80% 300 B Factor 1.41 160 Cumulative Production (Mboe) NGL: 64 MBbls 250 140 Yield (Bbls/MMcf) 47.5 Shrink 87.3% Avg. Boe/d 120 200 GAS: 1.2
Slide 12: Mississippian Well Performance
MISSISSIPPIAN WELL PERFORMANCE MULTI-YEAR Continued Improvement GROWTH Type Curve 849 Mcf/d Type Curve 176 Bbl/d www.SandRidgeEnergy.com 1210
Slide 13: Mississippian Well EURs
MISSISSIPPIAN WELL EURS MULTI-YEAR Continued Improvement GROWTH 20% COMMERCIAL 18% 16% 14% 12% % of Wells 10% 8% 6% 4% 2% 0% EUR (MBoe) 1 1 2 1 EURs are as of Year-End 2013 Wells Prior to 2013 2013 Wells 2014 Wells 2 EURs are per the Company’s estimates as of Mid-Year 2014 www.SandRidgeEnergy.com 13
Slide 14: Mid-Continent Focus Area
MID‐CONTINENT FOCUS AREA Deep Understanding of the Play FOCUSED ~650,000 Acres in Focus Area • 3D Required to Define Fracture Trends • Highest 30 Day Gas IPs • Positive Multi Lateral Results • Low H2O Cut • Upside as Gas Prices Rise • Highest 30 Day Oil IPs • Highest Liquids % • Lowest H2O Cut • Che
Slide 15: Multi-Zone Drilling Locations
MULTI‐ZONE DRILLING LOCATIONS Many Years of Drilling Ahead FOCUSED High-Graded Locations to Drill 4,510 wells Emerging Un-Risked Locations >8,000 wells development Marmaton Upper Miss HZ Wells to Sales 1 HZ Wells to Sales 849 Locations TBD Locations 2,668 Chester Middle Miss HZ Wells to Sales 5 HZ W
Slide 16: Applying Seismic Technology
APPLYING SEISMIC TECHNOLOGY INNOVATION Understanding The Rock 2013 - 730 square miles of 3D data acquired 2014- 1,070 square miles of new 3D data to acquire 2015 - 800 square miles of new 3d data to acquire KS OK Main fault trend Parallel fault trend 100 MILES COMPLETED PLANNED SD LEASEHOLD www.Sand
Slide 17: Multilateral Approach Is Successful
MULTILATERAL APPROACH IS SUCCESSFUL Changing how carbonates are developed INNOVATION Achieving Breakthrough Cost Upsides with Production Uplift Dual Stacked Lateral • Multilateral success achieved on three dual stacked laterals and one co- planar well in Grant, Alfalfa, and Harper counties during Q2
Slide 18: Innovation / Upside: Full Section Development
INNOVATION / UPSIDE FSD offers up to 34% more section for 26% less INNOVATION capex Full Section Development • Fracture stimulates 34% more interval: 22,000’ vs typically 16,400’ with four single Full Section Development laterals • Rock integrity of our carbonates (vs shales or sandstones elsewhere)
Slide 19: Saltwater Gathering & Disposal (SWG) Upsides
SALTWATER GATHERING & DISPOSAL (SWG) UPSIDES Produced water gathered and sequestered into Arbuckle through cost effective infrastructure Most Efficient SWG Operator in • Produce – ~1 million barrels of water per day at mid 2014 from 1,300 the midcontinent Mid-Continent producers • Average capacity o
Slide 20: Financial Strength
FINANCIAL STRENGTH FUNDED • Excellent cash and liquidity – $919MM cash at 6/30/14 – Fully undrawn credit facility of $775 MM – Total liquidity of $1.7 Bln • Comfortable leverage – 3.2x Q2’14 leverage ratio – No near term bond maturities • Growing cash flow – Product of 20-25% CAGR production growth
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Slide 22: 2014 Production Guidance
2014 PRODUCTION GUIDANCE GUIDANCE (A) 2013: 11.3 MMBoe of non-recurring production related to divested Permian and GoM assets (B) 2014: 1.3 MMBoe of non-recurring production related to divested GoM assets (2/25/2014 closing) www.SandRidgeEnergy.com 2220
Slide 23: Credit Profile
CREDIT PROFILE APPENDIX • ~$1.7 Bln liquidity at Q2’14 – $919MM cash – Fully undrawn credit facility of $775 MM • 3.2x Q2’14 leverage ratio • Borrowing base of $775MM undrawn; reserve value provides for significant increase potential • Significant oil hedges at strong prices provide cash flow stabil
Slide 24: Capital Structure Overview
CAPITAL STRUCTURE OVERVIEW APPENDIX Senior Notes ($ in millions) Preferred Stock ($ in millions) (a) 8.5% Convertible Perpetual Preferred $265 8.75% Sr Notes due 2020 $445 (b) 6.0% Convertible Preferred 200 7.5% Sr Notes due 2021 1,179 (c) 7.0% Convertible Perpetual Preferred 300 8.125% Sr Notes due
Slide 25: Consolidated Hedge Position Q3 2014-2016
CONSOLIDATED HEDGE POSITION Q3 2014 ‐ 2016 HEDGING 2014: 95% of Liquids Volumes Hedged 2015: 10.2 MMBBls Liquids volume hedged 2016: 1.8 MMBBLS Liquids volume hedged 97% of liquids revenue hedged 2.1 MMBbls 5.6 MMBBLS SWAPS UNHEDGED 3-Way UNHEDGED $99.08/Bbl Collars $92.44/BBL SWAPS 64% UNHEDGED 31%
Slide 26: 2013 Reserve Metrics
2013 RESERVE METRICS APPENDIX Focused On The Mississippian Play Pro Forma 2013 Excluding Gulf of Mexico Proved Reserves* SEC Pricing - $93.42 / $3.67 RESERVES PV10 434% Reserve Replacement Liquids Gas Equivalent % $MM % MMBbls Bcf MMBoe 63% Proved Developed Reserves by Reservoir Status PDP - Produci
Slide 27: 2014 Mississippian PUD Type Curve
2014 MISSISSIPPIAN PUD TYPE CURVE 380 MBoe, 48% Liquids FOCUSED 350 200 Oil: 118 MBo 30 Day IP (Bo/day) 176 180 1st Year Decline(a) 80% 300 B Factor 1.41 Cumulative Production (Mboe) 160 NGL: 64 MBbls 250 140 Yield (Bbls/MMcf) 47.5 Shrink 87.3% Avg. Boe/d 120 200 Type Curve EUR YE2013 GAS: 1.2 Bcf O
Slide 28: 2014 Operational Guidance Update
2014 OPERATIONAL GUIDANCE UPDATE APPENDIX Introducing a guidance range of 28 – 29 MMBoe or 19 – 23% pro forma production growth for 2014 a) EBITDA from Oilfield Services and Other is a non-GAAP financial measure as it excludes from net income interest expense, income tax expense and depreciation, de
Slide 29: 2014 Capex Guidance
2014 CAPEX GUIDANCE APPENDIX ($ in millions) DRILLING AND COMPLETION (D&C) WELL COUNTS GROSS NET Mid-Continent/Mississippian $1,040 Mid-Continent/Mississippian Focus Mid-Continent SWD Wells 60 460 331 Area Permian 110 Mid-Continent SWD 50 37 Gulf of Mexico / Gulf Coast 10 JV Carry (205) Permian 180
Slide 30: SandRidge Investor Relations
Our Mission at SandRidge is to create the premier, high-return, growth-oriented, resource conversion company, focused in the Midcontinent region of the United States. SANDRIDGE INVESTOR RELATIONS 123 Robert S. Kerr Avenue, Oklahoma City, OK 73102 investors@sandridgeenergy.com www.SandRidgeEnergy.com
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