SANDRIDGE ENERGY, INC. 2024 ANNUAL REPORT ON FORM 10-K
SandRidge Energy, Inc. filed its 2024 Annual Report on Form 10-K with the Securities and Exchange Commission, reporting financial results for the fiscal year ended December 31, 2024. The company’s aggregate market value of common stock held by non-affiliates was approximately $411.9 million as of June 30, 2024. As of March 4, 2025, there were 37,145,231 shares of common stock outstanding. The report includes financial statements, management’s discussion and analysis, and other information required by the Securities Exchange Act of 1934.
Overview
SandRidge Energy is an independent oil and natural gas company focused on acquisition, development, and production activities in the U.S. Mid-Continent region. The company’s financial performance in 2024 was impacted by lower commodity prices, which led to a decline in revenues compared to the prior year. However, SandRidge remained focused on prudent capital allocation and returning cash to shareholders through a dividend program.
Operational Activities
In 2024, SandRidge completed 3 operated wells and 1 non-operated well, down from 4 wells completed in 2023. Production volumes decreased slightly in 2024 due to natural decline, but were partially offset by new wells acquired in September 2024 and periods of higher ethane recovery. The company’s production mix was 15.2% oil, 53.6% natural gas, and 31.2% NGLs in 2024, compared to 17.0% oil, 55.3% natural gas, and 27.7% NGLs in 2023.
Highlighted Events
- In August 2024, SandRidge closed the acquisition of certain producing oil and gas properties in the Cherokee Play of the Western Anadarko Basin for $121.9 million.
- In September 2024, the company appointed Jonathan Frates as Executive Vice President and Chief Financial Officer, and Vincent Intrieri as Chairman of the Board.
- In April 2024, Dean Parrish was appointed as Senior Vice President and Chief Operating Officer.
Outlook
SandRidge remains committed to growing its asset base in a safe and efficient manner, with a focus on high-return organic growth projects. Key initiatives for 2025 include:
- One rig development in the Cherokee Shale Play, consisting of 9 wells to be spud, 8 wells to be drilled, and 6 wells to be completed.
- Production optimization through artificial lift conversions and high-graded recompletions.
- A leasing program to bolster future development and extend the company’s position in the Cherokee assets.
The company will continue to monitor commodity prices and other factors to guide its capital allocation decisions, while also evaluating potential merger and acquisition opportunities.
Consolidated Results of Operations
The table below presents SandRidge’s production and pricing information for 2024 and 2023:
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Oil Production (MBbls) | 918 | 1,047 | (129) |
| Natural Gas Production (MMcf) | 19,488 | 20,403 | (915) |
| NGL Production (MBbls) | 1,889 | 1,705 | 184 |
| Total Production (MBoe) | 6,056 | 6,152 | (96) |
| Average Daily Production (MBoe/d) | 16.5 | 16.9 | (0.4) |
| Average Oil Price ($/Bbl) | $74.31 | $74.69 | $(0.38) |
| Average Natural Gas Price ($/Mcf) | $1.10 | $1.71 | $(0.61) |
| Average NGL Price ($/Bbl) | $18.87 | $20.83 | $(1.96) |
| Average Total Price ($/Boe) | $20.69 | $24.16 | $(3.47) |
Revenues decreased by $23.4 million in 2024 compared to 2023, primarily due to lower commodity prices, partially offset by higher NGL production volumes.
Operating expenses for 2024 and 2023 are summarized in the table below:
| Expense | 2024 ($000s) | 2023 ($000s) | Change ($000s) |
|---|---|---|---|
| Lease Operating Expenses | $40,012 | $41,862 | $(1,850) |
| Production, Ad Valorem, and Other Taxes | $6,780 | $10,870 | $(4,090) |
| Depreciation and Depletion - Oil and Gas | $25,976 | $15,657 | $10,319 |
| Depreciation and Amortization - Other | $6,503 | $6,518 | $(15) |
| Total Operating Expenses | $79,271 | $74,907 | $4,364 |
| Lease Operating Expenses ($/Boe) | $6.61 | $6.80 | $(0.19) |
| Production, Ad Valorem, and Other Taxes ($/Boe) | $1.12 | $1.77 | $(0.65) |
| Depreciation and Depletion - Oil and Gas ($/Boe) | $4.29 | $2.54 | $1.75 |
The decrease in lease operating expenses was primarily due to lower workover costs. Production, ad valorem, and other taxes decreased due to a $1.4 million ad valorem tax refund and lower production taxes from lower commodity prices. The increase in depreciation and depletion for oil and gas properties was driven by the acquisition in the Cherokee Play.
SandRidge did not record any full cost ceiling impairments in 2024 or 2023. However, the company noted that future impairments could still be realized based on factors such as declines in SEC prices, production, and changes in estimated future development costs and operating expenses.
Other operating expenses for 2024 and 2023 are shown in the table below:
| Expense | 2024 ($000s) | 2023 ($000s) | Change ($000s) |
|---|---|---|---|
| General and Administrative | $11,695 | $10,735 | $960 |
| Restructuring Expenses | $474 | $406 | $68 |
| (Gain) Loss on Derivative Contracts | $(748) | $(1,447) | $699 |
| Other Operating Expense (Income) | $1,372 | $(157) | $1,529 |
| Total Other Operating Expenses | $12,793 | $9,556 | $3,237 |
The increase in general and administrative expenses was due to higher personnel and other costs. Other operating expense increased primarily due to a $1.3 million impairment on equipment inventory.
SandRidge recorded an income tax benefit of $22.2 million in 2024, compared to an income tax expense of $14.0 million in 2023, primarily due to a higher partial valuation allowance release against deferred tax assets.
Liquidity and Capital Resources
At December 31, 2024, SandRidge had $99.5 million in cash and cash equivalents, including restricted cash. The company’s working capital decreased to $67.1 million at the end of 2024, compared to $228.5 million at the end of 2023, primarily due to cash used for acquisitions, dividends, and capital expenditures.
Cash flows for 2024 and 2023 are summarized in the table below:
| Cash Flow | 2024 ($000s) | 2023 ($000s) |
|---|---|---|
| Operating Activities | $73,933 | $115,578 |
| Investing Activities | $(154,696) | $(36,164) |
| Financing Activities | $(73,670) | $(82,938) |
| Net Change in Cash | $(154,433) | $(3,524) |
The decrease in operating cash flows in 2024 was primarily due to lower revenues from weaker commodity prices. Investing cash flows were higher in 2024 due to $129.7 million in acquisitions, compared to $11.2 million in 2023. Financing cash flows decreased mainly from lower dividend payments.
SandRidge’s capital expenditures, excluding acquisitions, were $26.8 million in 2024 and $22.4 million in 2023. The company’s 2025 capital budget is expected to be between $66 million and $85 million, to be funded by cash flows from operations and cash on hand.
In May 2023, the Board approved a $75 million share repurchase program, of which $0.2 million was utilized in 2024. The company also paid $72.3 million in dividends in 2024, including a one-time $1.50 per share special dividend.
Critical Accounting Estimates
SandRidge’s critical accounting estimates include:
- Proved Reserves: Estimates of proved reserves are subject to significant uncertainty and can materially impact depreciation, depletion, and impairment expenses.
- Depreciation and Depletion of Oil and Gas Properties: The company uses the unit-of-production method, which is sensitive to changes in proved reserve estimates and future development costs.
- Impairment of Oil and Gas Properties: Capitalized costs are subject to a full cost ceiling limitation, which could result in impairments if costs exceed the ceiling.
These estimates rely on various assumptions and subjective interpretations of available data, which can lead to material revisions in the future.
Conclusion
SandRidge Energy navigated a challenging commodity price environment in 2024, with lower revenues and production compared to the prior year. However, the company remained focused on prudent capital allocation, completing strategic acquisitions, and returning cash to shareholders through a dividend program. Looking ahead, SandRidge is positioned to continue its organic growth initiatives in the Cherokee Play, while also evaluating potential M&A opportunities to further enhance its asset base. The company’s financial performance will continue to be influenced by commodity price volatility, but its strong balance sheet and disciplined approach provide a solid foundation for the future.
