SandRidge Energy Inc. (OTCMKTS:SDOCQ) recently hit all-time new lows after the bankruptcy was delayed in order for the shareholders challenging the Chapter 11 to gather more information.
In May SDOCQ filed for Chapter 11 after the prolonged slump in oil prices supported by an agreement with creditors that own more than two thirds of its $4.1 billion in funded debt obligations. The agreement includes a reserve-based lending facility and the conversion to equity of about $3.7 billion of other funded debt. SandRidge pro forma capital structure will consist of $425 million in first lien RBL debt, maturing in 2020, as well as $300 million in mandatorily convertible debt that will accrue interest on a non-cash basis and convert into equity. SandRidge expects to have enough liquidity to fund operation and its capital program through Chapter 11 without the need for further capital.
SandRidge Energy Inc. (OTCMKTS:SDOCQ) is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma with its principal focus on developing high-return, growth-oriented projects in the Mid-Continent region of the United States. In addition, SandRidge owns and operates a saltwater gathering and disposal system and a drilling rig and related oil field services
SandRidge is the largest producer in the water-rich Mississippi Lime formation in northwestern Oklahoma and accounted for about one-third of all the produced saltwater disposed into Arbuckle zones in 2014, according to an analysis of volume data from the Oklahoma Corporation Commission.
SDOC made its initial public offering on November 5, 2007, offering over 28 million common stocks at roughly $26.00 US a share. The Company was founded in 2006 by Tom Ward by virtue of buying approximately 50% of Riata Energy of Amarillo, TX. SandRidge’s drilling activities are focused on its oil properties in the Mid-Continent and Permian Basin. The Company also maintains production in West Texas. The company owns and operates drilling rigs under the brand name Lariat Services, Inc.
In the past SDOC was using hedges on its oil and natural gas production about 3 to 4 years into the future. This program was wisely instituted by ex CEO Tom Ward who left the Company in 2013 and will be mostly gone by 2016.
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SDOCQ like many small oil and gas producers had been in steep decline over the past year seeing its share price drop over 95% as oil and natural gas prices have continued to fall.
Oil prices surged this morning ending a 2 day slide after the US Federal Reserve announced its latest monetary policy decision that revealed it expects a much shallower path of increasing interest rates this year. Helping the climb in oil was the news that the UK is easing taxes on the North Sea industry to help producers.
The Wall Street Journal said this morning it expects a deal to be signed to freeze global oil supplies at January levels. Qatari minister Mohammed bin Saleh al-Sada said the initiative now had the support of 15 OPEC and non-OPEC producers.
Sandridge is among a large group of oil and gas explorers to experience turmoil as a result of the decline in both oil and natural gas prices. SDOC drills for oil and gas in Oklahoma, Kansas and Texas, where it has 4,411 gross producing wells and more than 2 million gross acres under lease. As of Dec. 31, it had four rigs drilling.
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Currently trading at a $7 million market valuation SDOCQ does have $690 million in the treasury and significant long term debt. The stock arrived on the OTC with a bang and there is little surprise why; SDOCQ has a ton going for it; besides the obvious incredible $790 million in cash the Company is actually healthy recently announcing it is delivering 300 per cent greater oil production and 200 per cent higher natural gas production compared to the previous artificial lift solution. They also did make some good moves in this oil price downturn; efficiencies and costs are cut dramatically, risks have been decreased and Company is now very well positioned as oil priced increase. In May SDOCQ filed for Chapter 11 after the prolonged slump in oil prices. The bankruptcy has been delayed in order for the shareholders challenging the Chapter 11 to gather more information. We will be updating on SDOCQ on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with SDOCQ.
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Disclosure: we hold no position in SDOC either long or short and we have not been compensated for this article.