One of the industry’s first major deals of the third quarter closed on Sept. 1 without any oil and gas assets changing hands.
SandRidge Energy Inc. said in a Sept. 1 release that it sold its skyscraper in Oklahoma City for $35.4 million in net proceeds, a figure that represents more than half of the company’s $61 million value on Wall Street. The sale should alleviate any concerns that SandRidge would re-enter bankruptcy after exiting bankruptcy in 2016 and shedding roughly $3.7 billion in debt.
The independent E&P company announced plans to sell the building on May 15, along with other cost cutting moves, as it grappled with falling commodity prices amid the pandemic. The brick and mortar tower and annex with parking was purchased by the state’s Commissioners of the Land Office.
SandRidge purchased the 30-story building from Chesapeake Energy Inc. in 2007. The Oklahoma County Assessor’s office listed the building with a $49.7 million market value and taxable value of $38 million.
The sale proceeds will go toward significantly reducing the company’s net debt position.
As of June 30, SandRidge reported holding $14.9 million in cash and $59 million in outstanding debt under its revolving credit facility. The company said the closing of the sale and resulting receipt of $35.4 million in net proceeds should alleviate any “substantial doubt about its ability to continue as a going concern.”
SandRidge is active in the northwestern STACK in Oklahoma and the North Park Basin in Colorado’s Jackson County.
In the STACK, SandRidge is targeting the Meramec across 56,000 net acres in Oklahoma’s Major, Woodward and Garfield counties. The company reported production of 1,600 boe/d (32% oil) in the Northwest STACK during the second quarter.
Net production in the North Park Basin during the quarter totaled 2,400 boe/d (100% oil). SandRidge is targeting multiple Niobrara benches on its 93,000-net-acre position in the basin where oil content exceeds 80% of total cumulative production.
During the second quarter, SandRidge also appointed a new executive management team including Carl F. Giesler Jr. as president and CEO in April.
Giesler previously served as CEO of Jones Energy Inc., where he spearheaded the cost and operational turnaround of that Midcontinent-focused E&P company. His efforts led to the $201.5 million all-cash buyout of Jones by Revolution Resources LLC in January 2020.
“Aside from the broader oil and gas industry, 2Q saw a substantial change at SandRidge as well,” Giesler said on SandRidge’s earnings call on Aug. 6. “Most notably, a wholesale change in executive management and a structural reset to how we run our business.”
“On the corporate side,” he continued, “staffing will stand at just over 15 people at the start of the fourth quarter, down almost 90% from the beginning of the year.”
Through personnel and other savings initiatives, SandRidge has lowered its adjusted G&A to sub-$2 per boe, according to Giesler, who described progress on LOE as being “equally significant with a leaner team.”
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