OKLAHOMA CITY - SandRidge Energy , Inc. (NYSE: SD) has entered into a definitive agreement to acquire oil and gas producing assets in the Western Anadarko Basin, specifically in the Cherokee play, for $144 million in cash, subject to customary adjustments.
The transaction includes 42 producing wells and 4 drilled but uncompleted wells in Ellis and Roger Mills Counties, Oklahoma, with an effective date of July 1, 2024, and expected closure in the third quarter of 2024.
The acquisition is set to enhance SandRidge's production metrics and is projected to increase the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow. The assets, which are primarily oil-producing, are anticipated to contribute to SandRidge's financial strength while maintaining its planned quarterly dividend.
In addition to the acquisition, SandRidge has entered into a Joint Development Agreement (JDA) to facilitate future collaboration on the development of the acquired leasehold interests. The agreement provides for the joint development of drilling spacing units (DSUs), potentially adding up to 22 two-mile lateral wells. SandRidge will assume operatorship of the new wells after production commences.
Grayson Pranin, President & CEO of SandRidge, expressed confidence in the transaction, stating that the assets align with the company's existing operations and will allow for the application of SandRidge's low-cost operating expertise. Pranin also noted the potential for future organic growth opportunities through the joint development of the assets.
The acquired assets are in proximity to SandRidge's ongoing leasing program, which could offer additional opportunities for the company's drilling projects. SandRidge plans to fund the acquisition with cash on hand, aiming to preserve its strong balance sheet and capital return program.
SandRidge, an independent oil and gas company, primarily operates in the Mid-Continent region of Oklahoma and Kansas. The company's legal advisor for the transaction is Winston & Strawn LLP.
This news is based on a press release statement from SandRidge Energy, Inc.
In other recent news, SandRidge Energy Inc (NYSE:SD). reported a net income of $11.1 million and generated $14.5 million of free cash flow in the first quarter of 2024. The company's production for the quarter totaled 1,376 MBoe, with oil, natural gas, and natural gas liquids prices realized at $75.08 per Bbl, $1.25 per Mcf, and $23.65 per Bbl, respectively.
The company's liquidity position as of March 31, 2024, was strong with $208.5 million in cash and cash equivalents, and no outstanding term or revolving debt obligations.
In addition, at its 2024 Annual Meeting of Stockholders, all four proposals presented were approved, including the election of five directors to serve until the 2025 Annual Meeting. The company's independent registered public accounting firm, Grant Thornton LLP, was ratified for the fiscal year ending December 31, 2024.
The compensation of SandRidge's named executive officers for the year 2023 was approved, and an extension to the Tax Benefits Preservation Plan was confirmed. These are among the latest developments for SandRidge Energy Inc.
InvestingPro Insights
In light of SandRidge Energy's recent move to acquire assets in the Western Anadarko Basin, a glance at the company's financial health through InvestingPro data reveals a few key points. SandRidge holds a market capitalization of $488.19 million and maintains a Price to Earnings (P/E) Ratio of 10.02, which slightly adjusts to 10.05 when looking at the last twelve months as of Q1 2024. This suggests a valuation that may be appealing to investors seeking reasonable earnings multiples in the energy sector.
The company's revenue for the same period was $135.78 million, although it experienced a significant revenue decline of 43.41%. Despite this, SandRidge has managed a gross profit margin of 63.12%, indicating a strong ability to control costs relative to its revenue. This operational efficiency is critical as the company expands its assets and takes on new production responsibilities.
InvestingPro Tips highlight that SandRidge holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations. This financial positioning is crucial as the company embarks on funding the $144 million acquisition with cash on hand. Moreover, with a noted InvestingPro Fair Value of $16.83, the current price of $13.33 could suggest potential room for growth, considering the company's strategic expansion and cost management capabilities.
For those interested in a deeper dive into SandRidge's financials and strategic positioning, InvestingPro offers additional insights. There are more InvestingPro Tips available that can guide investors on the nuances of the company's financial health and investment potential. Utilizing the promo code PRONEWS24, readers can secure up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a broader range of expert analysis and tips.
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