Sheridan Buys

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price

Sale of Permian Basin assets producing 24,500 BOE.

SandRidge Energy Inc. (NYSE: SD) plans to sell its Permian Basin properties to Sheridan Production Partners II for $2.6 billion in cash.

The Permian properties being sold were producing approximately 24,500 barrels of oil equivalent (BOE) per day at the end of the third quarter (67% oil, 15% NGLs and 18% natural gas) and exclude assets associated with SandRidge Permian Trust (NYSE: PER).

Tom Ward, SandRidge chairman and chief executive, said, "The sale of the Permian assets at this time has allowed us to capitalize on current strong valuations for mature, conventional Permian assets and generate a very strong return on our investment there."

Noting that the Permian Basin assets were a key part of SandRidge's planned strategic transition from a natural gas producer to an oil-rich upstream company, Ward added, "With these proceeds we will have a cash balance of almost $3 billion and liquidity of over $3.5 billion, which we intend to use to reduce debt and strengthen the balance sheet. This will also allow us to fund development of our acreage position as well as future opportunities in the highly scalable, high return Mississippian Play."

SandRidge said it will now focus its efforts on the Mississippian, which encompasses parts of northern Oklahoma and western Kansas. It believes the region can generate some of the highest rates of return for horizontal drilling. SandRidge has 1.85 million net acres and 11,000 possible future drilling locations.

“We also have a unique advantage because of extensive investments in critical infrastructure that make our operating costs there among the lowest in the industry. With the sale of the Permian assets, we will significantly reduce our debt balances and, with our ample cash and liquidity, be very well positioned to fund our capital expenditures through 2014 and deliver significant value to stockholders," Ward said.

SandRidge announced Nov. 8 that it was looking into selling the assets. The transaction is expected to close during the first quarter of 2013.

SandRidge received financial advice from RBC Richardson Barr and Morgan Stanley & Co. LLC. The buyer of the assets, privately-held Sheridan Production Partners II, is based in Houston, Texas.

SandRidge Energy Inc. is an oil and natural gas company headquartered in Oklahoma City, Oklahoma with its principal focus on exploration and production. SandRidge and its subsidiaries also own and operate gas gathering and processing facilities and CO2 treating and transportation facilities and conduct marketing operations. SandRidge focuses its exploration and production activities in the Mid-Continent, Permian Basin, Gulf of Mexico, West Texas Overthrust and Gulf Coast.