SandRidge Energy, Inc. Reports Financial and Operational Results for First Quarter of 2017

James Bennett, SandRidge President and CEO said, "Motivated by our recent successes in the NW STACK, we now have two rigs developing the Meramec in Major, Woodward and Garfield Counties, where we have 70,000 net acres. Low cost drilling, operational efficiencies and innovations established in our Mississippian program will benefit us as they are applied across our portfolio. Our Colorado North Park Basin drilling will resume at midyear with one rig. Plans there include more Niobrara extended laterals and drilling on our newly established 24,000 acre Federal Unit. The development of our oil-weighted NW STACK and North Park Basin Niobrara projects is creating material resource value and will drive oil production growth later in 2017. Supported by the flexibility of our unlevered balance sheet and $550 million of liquidity, we believe SandRidge has a compelling multiyear story."

Highlights during the first quarter include:

$51 Million of Net Income and $56 Million of Adjusted EBITDA

$41 Million of Capex During the Quarter (Excluding Previously Disclosed ~13,100 Net Acre NW STACK Acquisition)

Incremental Leasehold Additions Totaling 10,000 Net Acres Bring NW STACK Position to 70,000 Net Acres

Two Rigs Targeting Meramec in NW STACK

Q1'17 Production of 4.0 MMBoe (28% Oil, 22% NGLs and 50% Natural Gas)

Mississippian Full Section Development Multilateral (Three Lateral Equivalent), the Hawk Haven 2710 1-22H, Produced Combined 30-Day IP of 1,248 Boepd (47% Oil) at Drilling and Completion Costs of $5.5 Million or $1.8 Million per Lateral

2017 Capital Budget

The Company is reiterating prior capital spending guidance, expecting to invest between $210 and $220 million in 2017. This level of activity supports projected oil production growth in the second half of 2017. Depending on well results and commodity pricing, capital spending plans may be revised later in the year.

Two drilling rigs are currently active in the NW STACK play in Major, Woodward and Garfield Counties, Oklahoma. The Company plans to drill 22 gross laterals (17 net) in the Meramec and six laterals (gross and net) in the North Park Niobrara during 2017, predominantly drilling extended reach laterals.

Mid-Continent Assets in Oklahoma

• First quarter production of 3.7 MMBoe, (40.8 MBoepd, 23% oil, 24% NGLs, 53% natural gas)

• Drilled two laterals in the first quarter and brought three laterals online

• Incremental leasehold additions totaling 10,000 net acres bring current NW STACK position to 70,000 net acres

• Mississippian full section development multilateral, the Hawk Haven 2710 1-22H, produced a combined 30-Day IP of 1,248 Boepd or 416 Boepd per lateral equivalent (47% oil), drilled and completed for $5.5 million ($1.8 million per lateral)

• Currently running two rigs targeting Meramec in NW STACK

• Four Meramec extended reach wells currently in progress: one flowing back, one completing and two drilling

• Acquired rights to 329 square mile 3D seismic survey to further enhance NW STACK reservoir characterization

SandRidge is well established as the low-cost driller of Mississippian wells and expects to transfer capabilities and best practices, including ongoing application of extended reach lateral drilling, to become a low-cost leader in the adjacent NW STACK play as well.

Drilling activity has continued on Meramec targets following the success of the previously announced Medill 1-27H well in Major County, Oklahoma (30-Day IP of 925 Boepd, 77% oil and currently producing ~460 Boepd, with cumulative production of 99 MBoe after 140 days, 99% above type curve).  

Additional wells were spud and drilling continued at the end of the quarter in Major County, including the Campbell 2015 1-26H23H, the Company's first Meramec extended reach well drilled in Major County, offset to the Medill. Drilling was also underway in Garfield County with the Landrum 2305 1-30H31H, a Meramec extended reach well near existing SandRidge Meramec and Osage production. Both of these wells should have 30-Day initial production rates reported in the second quarter.

The Adams 2122 1-16H9H extended reach well targeting the Meramec in Woodward County was undergoing completion operations at the end of the first quarter, with a 30-Day initial production rate to be reported in the second quarter earnings release.

During the first quarter, the Company acquired ~13,100 net acres and 700 Boepd of production in the NW STACK of Oklahoma for $48 million of cash. The first new well on the acquired acreage will be spud during the second quarter of 2017.

Niobrara Asset in North Park Basin, Jackson County, Colorado

• First quarter production of 173 MBo (1.9 MBopd)

• Drilling activity to resume at midyear with current plans to have one rig targeting multiple Niobrara benches

• Average cumulative oil production as of May 4 from all wells drilled in 2016 exceeds type curve by 11%

• First "C" bench well, the Hebron 4-18H, (30-Day IP of 539 Boepd, 92% oil) produced cumulative oil of 70 MBo after 170 producing days. This volume is 32% higher than type curve and is the strongest single lateral of the 2016 program.

• Peterson Ridge and Rabbit Ears 3D seismic survey completed (61 square miles), increasing total NPB 3D seismic coverage to 115 square miles

• Extension of current oil transportation and marketing agreement continues ~$3.15/ bbl WTI differential through the end of 2018

North Park Basin drilling activity will resume midyear with three extended reach wells planned (equivalent to six laterals). In addition to continued "D" bench development, the Company will drill an extended lateral well targeting the "C" bench following excellent results from the Hebron 4-18H, the first "C" bench single lateral well drilled in 2016. The Hebron 4-18H, the Company's most productive single lateral in 2016, yielded a 30-Day IP of 539 Boepd, 92% of which was oil, and 70 MBo in its first six months of production, 32% above type curve.  2017 drilling will also include a Niobrara well in the newly established 24,000 net acre Rabbit Ears Federal Unit and the Company's first well targeting the thick B bench of the Niobrara.

Following encouraging results from the Company's 2016 drilling program, specific technical goals have been developed for the 2017 program to enhance reservoir characterization with the integration of newly acquired 3D seismic data, coring of multiple Niobrara benches and expanded logging suites.

The Company is currently assessing in-field gas processing (such as the use of mechanical refrigeration units), gas-to-liquids and gas reinjection, with the potential to generate additional revenue streams and reduce combusted gas volumes.

Other Operational Activities
During the first quarter, Permian Central Basin Platform properties produced 136 MBoe (1.5 MBoepd, 82% oil, 11% NGLs, 7% natural gas).

Key Financial Highlights and Results

First Quarter Results

• Net Income of $51 million, or $1.90 per share, for first quarter 2017 compared to a $324 million loss in first quarter of 2016
  
  
• Adjusted EBITDA was $56 million for first quarter 2017 compared to $42 million in first quarter 2016, pro forma for divestitures
  
  
• Adjusted net income of $21 million, or $0.78 per share, for first quarter 2017 compared to an adjusted net loss of $81 million in first quarter 2016
  
  
• Net cash provided from operating activities of $64 million for first quarter of 2017 compared to $163 million used in first quarter of 2016
  
  
• Adjusted operating cash flow of $53 million for first quarter 2017 compared to negative $111 million in first quarter 2016

Capitalization & Liquidity

• 35.9 million shares outstanding
  
  
• $600 million reserve-based credit facility with $425 million borrowing base
  
  
• Liquidity of $554 million including $137 million of cash and $417 million capacity under the credit facility, net of outstanding letters of credit
  
  
• Outstanding debt consists of a $38 million note secured by the Company's real estate, resulting in zero current net debt

Entering into the new credit facility in February 2017 triggered the release of $50 million of cash held in escrow to the Company and the conversion of all of the $264 million outstanding mandatorily convertible notes into approximately 14.1 million shares of the Company's common stock.

Hedging

Unchanged from the previous reporting period, in 2017 the Company has approximately 3.3 million barrels of oil hedged at an average WTI price of $52.24 as well as 32.9 billion cubic feet of natural gas hedged at an average price of $3.20 per MMBtu. 2017 oil hedges represent 80% of the midpoint of current oil volume guidance. 2017 gas hedges represent 77% of the midpoint of current gas volume guidance.

For 2018, the Company has approximately 1.8 million barrels of oil hedged at an average WTI price of $55.34. Subsequent to the first quarter, 9.1 billion cubic feet of natural gas swaps were added, bringing the total to approximately 12.8 billion cubic feet of natural gas hedged at an average price of $3.16 per MMBtu in 2018.

Conference Call Information

The Company will host a conference call to discuss these results on Thursday, May 11, 2017 at 8:00 am CDT. The telephone number to access the conference call from within the U.S. is (877) 201-0168 and from outside the U.S. is (647) 788-4901. The passcode for the call is 4580429. An audio replay of the call will be available from May 11, 2017 until 11:59 pm CDT on June 11, 2017. The number to access the conference call replay from within the U.S. is (800) 585-8367 and from outside the U.S. is (416) 621-4642. The passcode for the replay is 4580429.

A live audio webcast of the conference call will also be available via SandRidge's website, www.sandridgeenergy.com, under Investor Relations/Events. The webcast will be archived for replay on the Company's website for 30 days.

2017 Capital Expenditure and Operational Guidance

Presented below is the Company's capital expenditure and operational guidance for 2017. This information is unchanged from the initial release on February 22, 2017.

1)	Adjusted G&A  - Cash is a non-GAAP financial measure as it excludes from G&A non-cash compensation, severance, bad debt allowance, and other non-recurring items. The most directly comparable GAAP measure for Adjusted G&A - cash is General and Administrative Expense. Information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast the excluded items for future periods.
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