What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-04 compared with 2020-02-27 · 351 added, 494 removed, 825 unchanged (51% of the section changed)

6 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the Years Ended December 31, 201 9, 201 8 and 2017

Consolidated Statements Cash Flows for the Years Ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

6 unchanged sentences

Based on management’s assessment using the COSO criteria, management concluded the Company’s internal control over financial reporting was effective as of December 31, 2020.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 has been audited by Deloitte & Touche LLP an independent registered public accounting firm, as stated in its report which appears herein.

/s/ M ICHAEL A .

Chief Operating Officer and Interim President and Chief Executive Officer

Senior Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

SandRidge Energy, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of SandRidge Energy, Inc.

and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Houston, Texas

February 27, 2020

/s/ SALAH GAMOUDI

President and Chief Executive Officer

Salah Gamoudi

Senior Vice President, Chief Financial Officer and Chief Accounting Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

SandRidge Energy, Inc.

To the stockholders and the Board of Directors of SandRidge Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SandRidge Energy, Inc.

and subsidiaries (the "Company") as of December 31, 2019, the related consolidated statement of operations, changes in stockholders' equity (deficit), and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have audited the accompanying consolidated balance sheets of SandRidge Energy, Inc.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statement of operations, changes in stockholders' equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Proved Oil and Natural Gas Properties, Depletion, and Impairment — Refer to Notes 1, 8, and 9 to the consolidated financial statements

Critical Audit Matter Description

The Company’s proved and natural gas properties are amortized using the unit-of-production method and are evaluated for impairment using a ceiling limitation calculation.

The development of the Company’s oil and natural gas reserve quantities and the related future net revenues requires management to make significant estimates and assumptions related to the intent and ability to complete undeveloped proved reserves within a five-year development period, rates of production, and future development costs.

As a result of changing market conditions, commodity prices and future development costs, assumptions can change from period to period, causing the estimates of proved reserves to change.

The Company engages independent petroleum engineers to estimate oil and natural gas reserves using these estimates, assumptions, and engineering data.

Changes in these assumptions could materially affect the Company’s depreciation, depletion and impairment expenses.

The proved oil and natural gas properties balance was $1.5 billion and the associated accumulated depreciation, depletion and impairment was $1.4 billion as of December 31, 2020.

Depreciation, depletion- oil and natural gas expense was $50.3 million for the year ended December 31, 2020.

Impairment was $218.4 million for the year ended December 31, 2020.

Given the significant judgments made by management, performing audit procedures to evaluate the Company’s oil and natural gas reserve quantities and the related net revenues including management’s estimates and assumptions related to forecasted rates of production requires a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures to address management’s significant judgments and estimates associated with oil and natural gas reserves quantities and related future net revenues included the following, among others:

We evaluated the reasonableness of management’s estimated reserve quantities by performing the following:

Evaluating the experience, qualifications and objectivity of independent petroleum engineers.

For a sample of proved developed wells, we evaluated the well’s expected forecasted production by comparing such the expected decline rate of production in future periods to historical production volumes and decline rates of the well.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

February 27, 2020

We have served as the Company's auditor since 2019.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of SandRidge Energy, Inc.

Opinion on the Financial Statements

We have audited the consolidated balance sheet of SandRidge Energy, Inc.

and its subsidiaries (the “Company”) as of December 31, 2018, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Oklahoma City, Oklahoma

March 4, 2021

We served as the Company's auditor from 2005 to 2019.

We have served as the Company's auditor since 2019.

SandRidge Energy, Inc.

1 unchanged sentence

Consolidated Balance Sheets

(In thousands, except per share data)

(In thousands)

Current assets

39 unchanged sentences

Year Ended December 31,

2019 2018 2017

(In thousands, except per share amounts)

8 unchanged sentences

General and administrative 15,327 32,058

Accelerated vesting of employment compensation — 6,545 —

Proxy contest — 7,139 —

Terminated merger costs — — 8,162

Restructuring expenses 2,733 —

Employee termination benefits 8,433 4,792

(Gain) loss on derivative contracts ( 1,094 ) 17,155 ( 24,090 )

Gain on derivative contracts ( 5,765 ) ( 1,094 )

Other operating (income) expense 206 ( 608 )

Total expenses 388,483 713,612

(Loss) income from operations ( 446,767 ) ( 10,375 ) 39,631

Loss from operations ( 273,507 ) ( 446,767 )

Other (expense) income

Interest expense, net ( 1,998 ) ( 2,974 )

Gain on extinguishment of debt — 1,151 —

Other income, net 436 2,865 2,550

Other (expense) income, net ( 2,494 ) 436

Total other (expense) income ( 4,492 ) ( 2,538 )

(Loss) income before income taxes ( 449,305 ) ( 9,146 ) 38,313

Loss before income taxes ( 277,999 ) ( 449,305 )

Income tax benefit ( 646 ) —

Net (loss) income $ ( 449,305 ) $ ( 9,075 ) $ 47,062

(Loss) earnings per share

Net loss $ ( 277,353 ) $ ( 449,305 )

Loss per share

Basic $ ( 7.77 ) $ ( 12.68 )

11 unchanged sentences

Balance at December 31, 2018 35,687 $ 36 6,604 $ 88,516 $ 1,055,164 $ ( 295,995 ) $ 847,721

19,635 $ 20 6,442 $ 88,381 $ 758,498 $ ( 333,982 ) $ 512,917

Issuance of stock awards, net of cancellations 40 — — — — — —

1,583 2 — — ( 2 ) — —

Common stock issued for debt

14,328 14 — — 268,765 — 268,779

Common stock issued for general unsecured claims 45 — — — — — —

104 — — — — — —

Stock-based compensation — — — — 4,460 — 4,460

— — — — 17,912 — 17,912

Issuance of warrants for general unsecured claims — — 55 4 ( 4 ) — —

— — 128 119 ( 119 ) — —

Cash paid for tax withholdings on vested stock awards — — — — ( 367 ) — ( 367 )

— — — — ( 6,730 ) — ( 6,730 )

— — — — — 47,062 47,062

Balance at December 31, 2017

35,650 36 6,570 88,500 1,038,324 ( 286,920 ) 839,940

Issuance of stock awards, net of cancellations

9 — — — — — —

Common stock issued for general unsecured claims

28 — — — — — —

Stock-based compensation

— — — — 24,276 — 24,276

Issuance of warrants for general unsecured claims

— — 34 16 ( 16 ) — —

Cash paid for tax withholdings on vested stock awards

— — — — ( 7,420 ) — ( 7,420 )

Cumulative effect of adoption of

— — — — — ( 57 ) ( 57 )

Net loss — — — — — ( 449,305 ) ( 449,305 )

Balance at December 31, 2019 35,772 36 6,659 88,520 1,059,253 ( 745,357 ) 402,452

35,687 36 6,604 88,516 1,055,164 ( 295,995 ) 847,721

Issuance of stock awards, net of cancellations 96 — — — — — —

40 — — — — — —

Common stock issued for general unsecured claims 60 — — — — — —

45 — — — — — —

Stock-based compensation — — — — 3,031 — 3,031

— — — — 4,460 — 4,460

Issuance of warrants for general unsecured claims — — 75 — — — —

— — 55 4 ( 4 ) — —

Cash paid for tax withholdings on vested stock awards — — — — ( 64 ) — ( 64 )

— — — — ( 367 ) — ( 367 )

Cumulative effect of adoption of ASU 2016-02

— — — — — ( 57 ) ( 57 )

— — — — — ( 449,305 ) ( 449,305 )

Net loss — — — — — ( 277,353 ) ( 277,353 )

Balance at December 31, 2020 35,928 $ 36 6,734 $ 88,520 $ 1,062,220 $ ( 1,022,710 ) $ 128,066

4 unchanged sentences

Year Ended December 31,

2019 2018 2017

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income

$ ( 277,353 ) $ ( 449,305 )

Adjustments to reconcile net (loss) income to net cash provided by operating activities

Adjustments to reconcile net loss to net cash provided by operating activities

Provision for doubtful accounts

16 ( 462 ) 406

Depreciation, depletion and amortization

2 unchanged sentences

Debt issuance costs amortization

Amortization of discount, net of premium, on debt

— ( 47 ) ( 330 )

Gain on extinguishment of debt

— ( 1,151 ) —

Write off of debt issuance costs

(Gain) loss on derivative contracts

Gain on derivative contracts

( 5,765 ) ( 1,094 )

Cash received (paid) on settlement of derivative contracts

6,266 ( 35,325 ) 7,260

Gain on sale of assets

Stock-based compensation

4,254 23,377 15,750

( 187 ) ( 1,571 ) 344

Changes in operating assets and liabilities increasing (decreasing) cash

15,829 16,560 115

Prepaid expenses

( 714 ) 2,620 127

Other current assets

( 301 ) 170 191

Other assets and liabilities, net

12 unchanged sentences

Proceeds from sale of assets

1,593 28,358 21,834

Net cash used in investing activities

Net cash provided by (used) in investing activities

25,093 ( 189,849 )

10 unchanged sentences

( 64 ) ( 367 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 38,957 ) 54,848

NET DECREASE IN CASH, CASH EQUIVALENTS and RESTRICTED CASH

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS and RESTRICTED CASH

22,298 ( 13,677 )

CASH, CASH EQUIVALENTS and RESTRICTED CASH, beginning of year

19,645 101,308 174,071

CASH, CASH EQUIVALENTS and RESTRICTED CASH, end of year

7 unchanged sentences

SandRidge Energy, Inc.

is an oil and natural gas company with a principal focus on the acquisition, exploration and development of hydrocarbon resources in the United States.

is an oil and natural gas acquisition, development and production company headquartered in Oklahoma City, Oklahoma with a principal focus on developing and producing hydrocarbon resources in the United States.

Principles of Consolidation.

The consolidated financial statements include the accounts of the Company and its wholly owned or majority owned subsidiaries, including its proportionate share of the Royalty Trusts.

The consolidated financial statements include the accounts of the Company and its wholly owned or majority owned subsidiaries, including its proportionate share of the Royalty Trust.

All intercompany accounts and transactions have been eliminated in consolidation.

17 unchanged sentences

Although management believes these estimates are reasonable, actual results could differ significantly from those estimates.

Going Concern Consideration.

The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Cash and Cash Equivalents.

2 unchanged sentences

The Company maintains restricted escrow funds as required by certain contractual arrangements in accordance with the Plan.

In addition, the Company maintains funds related to collateralize letters of credit and credit cards issued by lenders that were party to the Prior Credit Facility.

Accounts Receivable, Net.

11 unchanged sentences

The Company also applies fair value accounting guidance to initially, or as events dictate, measure non-financial assets and liabilities such as those obtained through business acquisitions, property, plant and equipment and asset retirement obligations.

These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations.

Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two as considered appropriate based on the circumstances.

Under the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future oil and natural gas production or other applicable sales estimates, operational costs and a risk-adjusted discount rate.

The Company may use the present value of estimated future cash inflows and/or outflows, third-party offers or prices of comparable assets with consideration of current market conditions to fair value its non-financial assets and liabilities when necessary.

These assets and liabilities are subject to fair value adjustments

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

only in certain circumstances and are not subject to recurring revaluations.

Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two as considered appropriate based on the circumstances.

Derivative Financial Instruments.

10 unchanged sentences

Under full cost accounting, all costs directly associated with the acquisition, exploration and development of oil, natural gas and NGL reserves are capitalized into a full cost pool.

These capitalized costs include costs of unproved properties and internal costs directly related to the Company’s acquisition, exploration and development activities and capitalized interest.

The Company capitalized gross internal costs of $ 5.7 million, $ 8.8 million and $ 14.8 million during the years ended December 31, 2019, 2018 and 2017, respectively.

These capitalized costs include costs of unproved properties and internal costs directly related to the Company’s acquisition, development, and production activities and capitalized interest.

The Company capitalized gross internal costs of $ 0.7 million and $ 5.7 million during the years ended December 31, 2020 and 2019, respectively.

Capitalized costs are amortized using the unit-of-production method.

21 unchanged sentences

If applicable, these prices would be further adjusted to include the effects of any fixed price arrangements for the sale of oil and natural gas.

Derivative contracts that qualify and are designated as cash flow hedges are included in estimated future cash flows, although the Company historically has not designated any of its derivative contracts as cash flow hedges.

Derivative contracts that qualify and are designated as cash flow hedges

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

are included in estimated future cash flows, although the Company historically has not designated any of its derivative contracts as cash flow hedges.

The future cash outflows associated with future development or abandonment of wells are included in the computation of the discounted present value of future net revenues for purposes of the ceiling limitation calculation.

Sales and abandonments of oil and natural gas properties being amortized are accounted for as adjustments to the full cost pool, with no gain or loss recognized, unless the adjustments would significantly alter the relationship between capitalized costs and proved oil, natural gas and NGL reserves.

A significant alteration would not ordinarily be expected to occur upon the sale of reserves involving less than 25 % of the proved reserve quantities of a cost center.

A significant alteration would not ordinarily be expected to occur upon the sale of reserves involving less than 25 % of the proved reserve quantities of a cost center, unless it results in a greater than 10 % change to the depletion rate.

Property, Plant and Equipment, Net.

Other capitalized costs, including other property and equipment, such as electrical infrastructure assets and buildings, are carried at cost or the fair value established on the Emergence Date.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

and improvements are capitalized while repairs and maintenance are expensed.

Renewals and improvements are capitalized while repairs and maintenance are expensed.

Depreciation of such property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from 7 to 39 years for buildings and 1 to 27 years for the electrical infrastructure assets and other equipment.

When property and equipment components are disposed, the cost and the related accumulated depreciation are removed and any resulting gain or loss is reflected in the consolidated statements of operations.

Realization of the carrying value of property and equipment, other than electrical infrastructure assets, is reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying value of such asset may not be recoverable.

Assets are considered to be impaired if a forecast of undiscounted estimated future net operating cash flows directly related to the asset or asset group including disposal value is less than the carrying amount of the asset or asset group.

Realization of the carrying value of property and equipment is reviewed for possible impairment whenever events or changes in circumstances indicate that estimated future net operating cash flows directly related to the asset or asset group including disposal value is less than the carrying amount of the asset or asset group.

Impairment is measured as the excess of the carrying amount of the impaired asset or asset group over its fair value.

3 unchanged sentences

During the year ended December 31, 2020 the Company capitalized interest of approximately $ 0.7 million on unproved properties that were not currently being depreciated or depleted and on which exploration activities were in progress.

During the year ended December 31, 2018, the Company capitalized an insignificant amount of interest costs and did no t capitalize any interest costs in the year ended December 31, 2017, as capital expenditures were largely funded through sources other than debt during these periods.

During the year ended December 31, 2019 the Company capitalized interest of approximately $ 1.5 million on unproved properties that were not currently being depreciated or depleted and on which exploration activities were in progress.

Debt Issuance Costs.

The Company includes unamortized line-of-credit debt issuance costs, if any, related to its credit facility in other assets in the consolidated balance sheets.

Other debt issuance costs related to long-term debt, if any, are presented in the balance sheets as a direct deduction from the associated debt liability.

The Company includes unamortized line-of-credit debt issuance costs, if any, related to its New Credit Facility in other assets in the consolidated balance sheets.

Other debt issuance costs related to long-term debt, if any, are presented in the balance sheets as a direct deduction from the associated debt liability, if material.

Debt issuance costs are amortized to interest expense over the term of the related debt.

When debt is retired, any unamortized costs are written off and included in gain or loss on extinguishment of debt.

When debt is retired, any unamortized costs, if material are written off and included in gain or loss on extinguishment of debt.

Asset Retirement Obligations.

13 unchanged sentences

See Note 16 for further information on the Company's accounting policies related to revenues.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company accounts for natural gas production imbalances using the sales method, which recognizes revenue on all natural gas sold even though the natural gas volumes sold may be more or less than the Company's ownership entitles it to sell.

5 unchanged sentences

Equity compensation not capitalized is recognized in general and administrative expenses, production expenses, and other operating expense in the accompanying consolidated statements of operations.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Restructuring expenses .

Restructuring expenses represent fees and costs associated with our outsourcing and relocation of certain corporate specific functions that are of a non-recurring nature, and expenses related to the 2016 bankruptcy.

Income Taxes.

19 unchanged sentences

The Company monitors the credit ratings of its commodity derivative counterparties on an ongoing basis and considers their credit default risk ratings in determining the fair value of its commodity derivative contracts.

The Company’s commodity derivative contracts are with multiple counterparties to minimize exposure to any individual counterparty.

If the Company defaults on its credit facility it will also default on commodity derivative contracts with counterparties that are lenders under the credit facility.

The Company does not require collateral or other security from counterparties to support commodity derivative instruments.

The Company has master netting agreements with all of its commodity derivative counterparties, which allow the Company to net its commodity derivative assets and liabilities for like commodities and derivative instruments with the same counterparty.

As a result of the netting provisions, the Company’s maximum amount of loss under commodity derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the commodity derivative contracts.

The Company’s loss is further limited as any amounts due from a defaulting counterparty that is a lender under the credit facility can be offset against any amounts owed to the same counterparty under the credit facility.

The Company’s commodity derivative contracts have been with multiple counterparties to minimize exposure to any individual counterparty.

The Company was not required to provide collateral to counterparties in order to secure commodity derivative instruments.

The Company had master netting agreements with all of its commodity derivative counterparties, which allowed the Company to net its commodity derivative assets and liabilities for like commodities and derivative instruments with the same counterparty.

As a result of the netting provisions, the Company’s maximum amount of loss under commodity derivative transactions due to credit risk was limited to the net amounts due from the counterparties under the commodity derivative contracts.

The Company’s loss was further limited as any amounts due from a defaulting counterparty that was a lender under

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

the Prior Credit Facility could have been offset against any amounts owed to the same counterparty under the Prior Credit Facility.

The Company operates a substantial portion of its oil and natural gas properties.

4 unchanged sentences

The Company believes alternate purchasers are available in its areas of operations and does not believe the loss of any one purchaser would materially affect its ability to sell the oil, natural gas and NGLs it produces.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company had sales exceeding 10% of total revenues to the following oil and natural gas purchasers (in thousands):

1 unchanged sentence

December 31, 2020

Targa Pipeline Mid-Continent West OK LLC $ 85,780 32.1 %

Sinclair Crude Company $ 74,810 28.0 %

Plains Marketing, L.P.

$ 40,058 34.8 %

December 31, 2018

Targa Pipeline Mid-Continent West OK LLC $ 38,287 33.3 %

Plains Marketing, L.P.

$ 102,182 29.2 %

Sinclair Crude Company $ 36,375 31.6 %

1 unchanged sentence

Targa Pipeline Mid-Continent West OK LLC $ 85,780 32.1 %

Sinclair Crude Company $ 74,810 28.0 %

Plains Marketing, L.P.

$ 69,214 25.9 %

Recent Accounting Pronouncements.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, “Leases (Topic 842),” and subsequently issued other associated ASU's related to Topic 842 which supersede Accounting Standards Codification ("ASC") 840 and require lessees to recognize right of use ("ROU") lease assets and liabilities on the balance sheet for long-term leases formerly classified as operating leases under ASC 840, and to disclose key information about leasing arrangements.

The Company adopted this ASU on January 1, 2019 using a modified retrospective approach for all ROU leases that existed at the period of adoption and did not restate its comparative periods.

See Note 7 for additional discussion of the new leasing standard.

Recently Adopted Accounting Pronouncements .

Accounting Standards Updates ("ASU") 2016-13 - In March 2016, the FASB issued ASU 2016-13, “Financial Instruments —Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments,” which changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The standard replaced the previously required incurred loss approach with an expected loss model for instruments measured at amortized cost.

The company adopted this ASU on January 1, 2020 using a modified retrospective approach;

however, the impact was not material upon adoption.

Recent Accounting Pronouncements Not Yet Adopted.

The FASB issued ASU 2016-13, “Financial Instruments —Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments,” and subsequently issued other associated ASU's related to Topic 326, which change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The standard will replace the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost.

The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for the interim and annual periods beginning after December 31, 2018, and will be applied using a modified retrospective approach resulting in a cumulative effect adjustment to retained earnings upon adoption.

The Company does not plan to early adopt and is currently evaluating the effect the guidance will have on its consolidated financial statements;

however, the impact is not expected to be material.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

ASU 2020-04 - In March 2020, FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), to facilitate the effects of reference rate reform on financial reporting.

This ASU provides optional practical expedients and exceptions for applying US GAAP provisions to contracts, hedging relationships, and other transactions that reference LIBOR, or other reference rates expected to be discontinued because of reference rate reform, if certain criteria are met.

The provisions of this ASU do not apply to contract modifications made and hedging transactions entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The amendments in ASU 2020-04 are effective, for all entities, as of March 12, 2020 through December 31, 2022.

The Company is currently reviewing the potential impact of the upcoming LIBOR reference rate change on its current contracts and hedging relationships and will determine the applicable provisions of ASU 2020-04.

ASU 2019-12 - In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” which simplifies various aspects of accounting for income taxes, including requirements related to hybrid tax regimes, the tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of entities not subject to tax, the intraperiod tax allocation exception to the incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax laws, and year-to-date loss limitation in interim-period tax accounting.

7 unchanged sentences

Year Ended December 31,

2019 2018 2017

Supplemental Disclosure of Cash Flow Information

5 unchanged sentences

Carrying value of properties exchanged $ 3,890 $ 5,384

Equity issued for debt $ — $ — $ ( 268,779 )

Acquisitions and Divestitures of Oil and Gas Properties

Acquisitions, Divestitures and Disposal of Assets and Oil and Gas Properties

2020 Acquisitions and Divestitures

On September 10, 2020, the Company acquired all of the overriding royalty interests held by SandRidge Mississippian Royalty Trust II ("the Trust") for a net purchase price of $ 3.3 million, given our 37.6 % ownership of the Trust.

The Company accounted for this transaction as an asset acquisition and allocated the purchase price of the acquisition plus the transactions costs to oil and gas properties.

On August 31, 2020, the Company closed on the previously announced sale of its corporate headquarters building located in Oklahoma City, OK, for net proceeds of approximately $ 35.4 million.

See Note 9 for additional discussion on the sale of the building.

2019 Acquisitions and Divestitures

Nonmonetary transaction.

1 unchanged sentence

The fair value of the assets given in the transaction approximated their carrying value, therefore no gain or loss was recognized on the transfer.

2018 Divestitures

Divestiture of Permian Basin Properties.

On November 1, 2018, the Company sold substantially all of its oil and natural gas properties, rights and related assets in the CBP region of the Permian Basin, primarily located in Andrews County, TX, along with 13,125,000 common units representing a 25 % equity interest in the Permian Trust, to an independent third party for $ 14.5 million in cash, subject to certain remaining post-closing adjustments, and reduced its asset retirement obligations by approximately $ 26.9 million.

The CBP assets and interest in the Permian Trust included 1,066 producing wells within the Permian Trust's area of mutual interest, certain wells not associated with the Permian Trust, a field office, and all equipment, inventory and yards associated with the Company's CBP operations.

As a result of this divestiture, the Company no longer has any obligations associated with the Permian Trust.

This transaction did not result in a significant alteration of the relationship between the Company’s capitalized costs and proved reserves and, accordingly, the divestiture was accounted for as an adjustment to the full cost pool with no gain or loss recognized on the sale.

2018 Acquisitions

Acquisition of Oil and Natural Gas Interests.

On November 2, 2018, the Company acquired an interest in certain oil and natural gas properties, rights and related assets in the Mississippian Lime and NW STACK areas of Oklahoma and Kansas for approximately $ 22.5 million in net consideration, net of post-closing adjustments, and assumed asset retirement obligations of approximately $ 6.4 million.

The acquired assets primarily consist of interests in 1,199 producing wells, approximately 80 % of which are operated by the Company, an additional 11.1 % working interest in approximately 397,000 gross ( 44,000 net) acres across the Mid-Continent, and an additional 13.2 % working interest ownership in the Company's saltwater gathering and disposal system in the Mississippian Lime.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

2017 Acquisitions

Acquisition of Properties.

On February 10, 2017, the Company acquired assets consisting of approximately 13,000 net acres in Woodward County, Oklahoma for approximately $ 47.8 million in cash, net of post-closing adjustments.

Also included in the acquisition were working interests in four wells previously drilled on the acreage.

2017 Divestitures

2017 Property Divestitures.

In 2017, the Company divested various non-core oil and natural gas properties for approximately $ 17.1 million in cash.

All of these divestitures were accounted for as adjustments to the full cost pool with no gain or loss recognized.

Fair Value Measurements

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The carrying values of cash, restricted cash, accounts receivable, prepaid expenses, certain other current and non-current assets, accounts payable and accrued expenses and other current liabilities and other long-term obligations included in the consolidated balance sheets approximated fair value at December 31, 2020 and December 31, 2019.

Additionally, the carrying amount of debt associated with borrowings outstanding under the credit facility approximates fair value as borrowings bear interest at variable rates.

Additionally, the carrying amount of debt associated with borrowings outstanding under the New Credit Facility approximates fair value as borrowings bear interest at variable rates.

As a result, these financial assets and liabilities are not discussed below.

The fair values of property, plant and equipment classified as assets held for sale and related impairments and nonmonetary transactions, which are calculated using Level 3 inputs, are discussed in Note 8 and Note 9.

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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Level 3 Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources ( i.e., supported by little or no market activity).

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Assets and liabilities that are measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement.

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The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

The Company has assets and liabilities classified in Level 2 of the hierarchy as of December 31, 2019 and 2018, as described below.

The Company has assets and liabilities classified in Level 2 of the hierarchy as of December 31, 2019, as described below.

Level 2 Fair Value Measurements

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Credit default risk ratings are based on current published credit default swap rates.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Fair Value - Recurring Measurement Basis

The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy (in thousands):

December 31, 2019

Fair Value Measurements Netting(1) Assets/Liabilities at Fair Value

Level 1 Level 2 Level 3

Commodity derivative contracts $ — $ 114 $ — $ — $ 114

$ — $ 114 $ — $ — $ 114

There are no open commodity derivatives contracts as of December 31, 2020.

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy (in thousands):

December 31, 2019

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Total accounts receivable, net $ 19,576 $ 28,644

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table presents the balance and activity in the allowance for doubtful accounts for the years ended December 31, 2020 and 2019 (in thousands):

Year Ended December 31,

2019 2018 2017

Beginning balance $ 1,117 $ 1,295

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____________________

(1) The Company performed an assessment of receivable balances related to governmental and other regulatory items during the year ended December 31, 2020, and recorded a $ 2.5 million allowance that is non-recurring in nature.

(2) Deductions represent the write-off of receivables and collections of amounts for which an allowance had previously been established.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Commodity Derivatives

2 unchanged sentences

The Company has not designated any of its derivative contracts as hedges for accounting purposes.

All derivative contracts are recorded at fair value with changes in derivative contract fair values recognized as gain or loss on derivative contracts in the condensed consolidated statements of operations.

All derivative contracts are recorded at fair value with changes in derivative contract fair values recognized as gain or loss on derivative contracts in the consolidated statements of operations.

None of the Company’s commodity derivative contracts may be terminated prior to contractual maturity solely as a result of a downgrade in the credit rating of a party to the contract.

2 unchanged sentences

Year Ended December 31,

2019 2018 2017

(Gain) loss on commodity derivative contracts $ ( 1,094 ) $ 17,155 $ ( 24,090 )

Cash (received) paid on settlements $ ( 6,266 ) $ 35,325 $ ( 7,260 )

Gain on commodity derivative contracts $ ( 5,765 ) $ ( 1,094 )

Cash received on settlements $ ( 5,879 ) $ ( 6,266 )

Master Netting Agreements and the Right of Offset.

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As a result of the netting provisions, the Company's maximum amount of loss under commodity derivative transactions due to credit risk is limited to the net amounts due from its counterparties.

As of December 31, 2019, the counterparties to the Company’s open commodity derivative contracts consisted of three financial institutions, all of which are also lenders under the Company’s credit facility.

The Company is not required to post additional collateral under its commodity derivative contracts as all of the counterparties to the Company’s commodity derivative contracts share in the collateral supporting the Company’s credit facility.

The following tables summarize (i) the Company's commodity derivative contracts on a gross basis, (ii) the effects of netting assets and liabilities for which the right of offset exists based on master netting arrangements and (iii) for the Company’s net derivative liability positions, the applicable portion of shared collateral under the credit facility as of December 31, 2019 and 2018 (in thousands):

December 31, 2019

Gross Amounts Gross Amounts Offset Amounts Net of Offset Financial Collateral Net Amount

Derivative contracts - current

$ 114 $ — $ 114 $ — $ 114

As of December 31, 2019, the counterparties to the Company’s open commodity derivative contracts consisted of three financial institutions, all of which were also lenders under the Company’s Prior Credit Facility.

The Company was not required to post additional collateral under its commodity derivative contracts as all of the counterparties to the Company’s commodity derivative contracts shared in the collateral supporting the Company’s Prior Credit Facility.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

There are no open commodity derivatives contracts as of December 31, 2020.

The following table summarizes (i) the Company's commodity derivative contracts on a gross basis, (ii) the effects of netting assets and liabilities for which the right of offset exists based on master netting arrangements and (iii) for the Company’s net derivative liability positions, the applicable portion of shared collateral under the Prior Credit Facility as of December 31, 2019 (in thousands):

December 31, 2019

3 unchanged sentences

$ 114 $ — $ 114 $ — $ 114

At December 31, 2019, the Company’s open commodity derivative contracts consisted of the following:

Oil Price Swaps

Notional (Bbl) Weighted Average

January 2020 - March 2020 273,000 $ 61.05

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Fair Value of Derivatives

The following table presents the fair value of the Company’s derivative contracts on a gross basis without regard to same-counterparty netting (in thousands):

December 31, December 31,

Type of Contract Balance Sheet Classification 2019

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See Note 4 for additional discussion of the fair value measurement of the Company’s derivative contracts.

As discussed in Note 1, the Company adopted ASU 2016-02, "Leases (Topic 842)" on January 1, 2019 using a modified retrospective approach for all ROU leases that existed at the period of adoption and did not restate its comparative periods.

Topic 842 provides practical expedients to assist with the transition to the new standard.

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Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Adoption of this standard resulted in additional ROU lease assets and lease liabilities of approximately $ 2.3 million and $ 2.4 million, respectively, as of January 1, 2019, which did not materially impact the Company's consolidated financial statements.

The difference between the net lease assets and liabilities was recognized as a cumulative-effect adjustment to the opening balance of retained earnings.

Operating leases are included in other assets, other current liabilities and other long-term obligations, and finance leases are included in other property, plant and equipment, other current liabilities and other long-term obligations on the accompanying condensed consolidated balance sheet as of December 31, 2019.

The Company had no significant capital or operating leases with terms longer than 12 months at December 31, 2018.

The Company had operating and financing leases for vehicles, drilling rigs and equipment outstanding during the year ended December 31, 2019, which were not significant to the consolidated financial statements.

Operating leases are included in other assets, other current liabilities and other long-term obligations , and finance leases are included in other property, plant and equipment, other current liabilities and other long-ter m obligations on the accompanying consolidated balance sheet as of December 31, 2020.

The Company had operating and financing leases for vehicles and equipment outstanding during the year ended December 31, 2020, which were not significant to the consolidated financial statements.

The components of lease costs recognized for the Company's ROU leases are shown below (in thousands):

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

The components of lease costs recognized for the Company's ROU leases are shown below (in thousands):

Year Ended December 31, 2019

Year Ended December 31, 2020 Year Ended December 31, 2019

Short-term lease cost (1) $ 1,880 $ 9,994

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___________________

(1) $ 4.8 million of short-term lease cost was capitalized as part of oil and natural gas properties during the year ended December 31, 2019.

(1) There were no short-term lease costs capitalized as part of oil and natural gas properties during the year ended December 31, 2020 and $ 4.8 million in 2019.

Portions of these costs were reimbursed to the Company by other working interest owners.

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Total property, plant and equipment, net $ 209,340 $ 567,943

The average rates used for depreciation and depletion of oil and natural gas properties were $ 12.28 per Boe in 2019, $ 10.32 per Boe in 2018 and $ 7.92 per Boe in 2017.

The average rates used for depreciation and depletion of oil and natural gas properties were $ 5.11 per Boe in 2020 and $ 12.28 per Boe in 2019.

See Note 9 for discussion of impairment of other property, plant and equipment.

Costs Excluded from Amortization

The following table summarizes the costs, by year incurred, related to unproved properties, which were excluded from oil and natural gas properties subject to amortization at December 31, 2019 (in thousands):

Year Cost Incurred

Total 2019 2018 2017 2016 and Prior

Property acquisition $ 23,973 $ 2,653 $ 2,353 $ 4,280 $ 14,687

Exploration 630 10 16 564 40

Total costs incurred $ 24,603 $ 2,663 $ 2,369 $ 4,844 $ 14,727

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The costs excluded from amortization was related to unproved properties, which were excluded from oil and natural gas properties subject to amortization at December 31, 2020 and 2019 were $ 18.0 million and $ 24.6 million, respectively.

For leases that do not have existing production that would otherwise extend the lease term, the Company estimates that any associated unproved costs will be evaluated and transferred to the amortization base of the full cost pool within a three to five year period from the original lease date.

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In addition, the Company’s internal engineers evaluate all properties on a quarterly basis.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company assesses the need to impair its oil and gas properties during its quarterly full cost pool ceiling limitation calculation.

3 unchanged sentences

Year Ended December 31,

2019 2018 2017

Full cost pool ceiling limitation $ 218,399 $ 409,574

Drilling assets(2) — 22 4,019

Midstream assets(3) — 4,148 —

$ 409,574 $ 4,170 $ 4,019

Other 38,000 —

$ 256,399 $ 409,574

The ceiling limitation impairment charges recorded for the year ended December 31, 2020 resulted from various factors, including a decrease in proved reserve value driven by a significant decline in the trailing twelve-month weighted average oil and natural gas prices in the first, second and third quarters of 2020.

Impairment recorded in the year ended December 31, 2019 largely resulted from a decrease in the trailing twelve-month weighted average SEC prices for oil and natural gas prices in 2019, lower NGL prices, increases in expected operating expenses, and other less significant inputs.

See Note 21 for additional discussion of our oil and gas producing properties.

(2) Impairment recorded in the years ended December 31, 2018 and 2017 reflects the write-down of remaining drilling and oilfield services assets classified as held for sale to net realizable value.

(3) Impairment recorded in 2018 reflects the write down of $ 5.7 million in midstream generator assets classified as held for sale to their net realizable value of $ 1.6 million.

For the quarter ended December 31, 2020, we recorded a full cost ceiling limitation impairment charge of $ 2.6 million.

The asset impairment charge of $ 38.0 million recorded for the year ended December 31, 2020 resulted from the write down of the net carrying amount of the office headquarters building assets to their estimated fair value less estimated costs to sell the building.

In May 2020, the Company entered into an agreement for the sale of its corporate headquarters building located in Oklahoma City, OK.

The building sale closed on August 31, 2020.

In accordance with the applicable accounting guidance, FASB ASC 360-10-45-9, the Company reclassified its corporate headquarters building net carrying amount from Other property, plant and equipment, net, to Assets held for sale on the Consolidated Balance Sheet at June 30, 2020.

The Company also reclassified the liabilities associated with the corporate headquarters building from Accounts payable and accrued expenses to Liabilities held for sale on the Consolidated Balance Sheet at June 30, 2020.

Further, the Company recorded an impairment charge of $ 38.0 million in the three-month period ended June 30, 2020 to write down the net carrying amount of the office headquarters building assets to their estimated fair value less estimated costs to sell the building.

No impairment charges were recorded for the corporate headquarters building assets for the year ended December 31, 2019.

Prior to the sale of the corporate headquarters building, the carrying amount of the building was assessed for recoverability and impairment using undiscounted cash flow measures of the consolidated Company as prescribed under ASC 360-10-35, rather than fair value as prescribed under ASC 360-10-45-9.

Accounts Payable and Accrued Expenses

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Total accounts payable and accrued expenses $ 51,426 $ 64,937

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Long-Term Debt

Long-term debt consists of the following (in thousands):

Credit facility

New Credit Facility - Term Loan $ 20,000 $ —

Prior Credit Facility — 57,500

Total debt 20,000 57,500

1 unchanged sentence

Long-term debt $ 20,000 $ 57,500

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Credit Facility.

On June 21, 2019, the Company amended and restated its existing $ 600.0 million reserve-based revolving credit facility.

The initial borrowing base of the restated credit facility was $ 300.0 million, which was reduced to $ 225.0 million during the semi-annual redetermination concluded in November 2019.

The next borrowing base redetermination is scheduled for April 2020.

The restatement extended the credit facility maturity date to April 1, 2021 from March 31, 2020.

The Company has $ 57.5 million outstanding under the credit facility at December 31, 2019, and $ 2.9 million in outstanding letters of credit, which reduce availability under the restated credit facility on a dollar-for-dollar basis.

The interest rate on outstanding borrowings under the restated credit facility was determined by a pricing grid tied to borrowing base utilization of (a) LIBOR plus an applicable margin that varies from 2.00 % to 3.00 % per annum, or (b) the base rate plus an applicable margin that varies from 1.00 % to 2.00 % per annum.

Interest on base rate borrowings is payable quarterly in arrears and interest on LIBOR borrowings is payable every one, two, three or six months, at the election of the Company.

Quarterly, the Company pays commitment fees assessed at annual rates of 0.50 % on any available portion of the credit facility.

During the year ended December 31, 2019, the weighted average interest rate paid for borrowings outstanding under both the previously outstanding credit facility and the amended and restated credit facility was approximately 4.7 %.

The Company has the right to prepay loans under the credit facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to LIBOR loans.

The restated credit facility is secured by (i) first-priority mortgages on at least 85 % of the PV-9 valuation of all proved reserves included in the most recently delivered reserve report of the Company, (ii) a first-priority perfected pledge of substantially all of the capital stock owned by each credit party and equity interests in the Royalty Trusts that are owned by a credit party and (iii) a first-priority perfected security interest in substantially all the cash, cash equivalents, deposits, securities and other similar accounts, and other tangible and intangible assets of the credit parties (including but not limited to as-extracted collateral, accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property and the proceeds of the foregoing).

The restated facility includes events of default and certain customary affirmative and negative covenants.

The Company is required to maintain certain financial covenants including (i) a maximum consolidated total net leverage ratio, measured as of the end of any fiscal quarter, of no greater than 3.50 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the end of any fiscal quarter, of no less than 2.25 to 1.00.

On November 30, 2020 the Company entered into a $ 30 million credit facility with a related party and affiliate of Icahn Enterprises and Icahn Agency Services LLC, as administrative agent (the “New Administrative Agent”).

The New Credit Facility matures on November 30, 2023.

The New Credit Facility consists of a $ 10 million revolving loan facility and a $ 20 million term loan facility.

At December 31, 2020, the Company had a $ 20.0 million term loan outstanding under the New Credit Facility and $ 10.0 million available to be drawn under the New Credit Facility.

The New Credit Facility replaced the Company’s Prior Credit Facility, dated February 10, 2017, as amended which was terminated effective November 30, 2020 and otherwise would have matured on April 1, 2021.

The company used the $ 20.0 million term loan proceeds to repay the $ 12.0 million outstanding on the Prior Credit Facility on November 30, 2020.

There are no scheduled borrowing base redeterminations under the New Credit Facility.

The outstanding borrowings under the New Credit Facility bear interest at a rate tied to a utilization ratio of (a) LIBOR plus an applicable margin that varies from 200 to 300 basis points or (b) the base rate plus an applicable margin that varies from 100 basis points to 200 basis points.

During the year ended December 31, 2020, the weighted average interest rate paid for borrowings outstanding under both the outstanding Prior Credit Facility and the New Credit Facility was approximately 3.2 %.

The Company has the right to prepay loans under the New Credit Facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to LIBOR loans.

Furthermore, the New Credit Facility is secured by (i) first-priority mortgages on at least 95 % of the PV-9 pricing of the of all proved reserves included in the most recently delivered reserve report of the Company, (ii) a first-priority perfected pledge of substantially all of the capital stock owned by each credit party and (iii) a first-priority security interest in the cash, cash equivalents, deposit, securities and other similar accounts, and a first-priority perfected security interest in substantially all other tangible and intangible assets of the credit parties (including but not limited to as-extracted collateral, accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property and the proceeds of the foregoing).

The New Credit Facility includes events of default and certain customary affirmative and negative covenants.

The Company is required maintain certain financial covenants, commencing with the first full quarter ending after the effective date thereof to, maintain (i) a maximum consolidated total net leverage ratio, measured as of the end of any fiscal quarter, of no greater than 3.50 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the end of any fiscal quarter, of no less than 2.25 to 1.00.

As of December 31, 2020, the Company was in compliance with all applicable covenants and had a consolidated total net leverage ratio of ( 0.15 ) and consolidated interest coverage ratio of 26.71 .

The credit facility previously outstanding from February 10, 2017 through June 21, 2019 had an initial borrowing base of $ 425.0 million, which was reduced to $ 350.0 million during a borrowing base redetermination in October 2018.

The previously outstanding credit facility had materially similar terms and covenants to the current amended and restated credit facility, but was secured by first-priority mortgages on at least 95 % of the PV-9 valuation of the Company's proved reserves and interest was calculated based on a pricing grid tied to the borrowing base utilization rate of (a) LIBOR plus an applicable margin that varied from 3.00 % to 4.00 % per annum, or (b) the base rate plus an applicable margin that varied from 2.00 % to 3.00 % per annum.

The Company incurred an immaterial amount of interest expense on the previously outstanding credit facility during the years ended December 31, 2018 and 2017.

Building Note.

In February 2018, the Company fully repaid the Building Note in the amount of $ 36.3 million, which was comprised of an initial principal amount of $ 35.0 million and $ 1.3 million in in-kind interest costs that were previously added to the principal.

An unamortized premium of $ 1.2 million was recognized as a gain on extinguishment of debt in the condensed consolidated statement of operations for the year ended December 31, 2018 in connection with the repayment.

During the year ended December 31, 2020, the Company paid a related party, an affiliate of Icahn Enterprises, an immaterial amount of interest expense which is included on the Interest expense, net line item on the Consolidated Statement of Operations.

The total outstanding balance of the New Credit facility is recorded in long-term debt on the consolidated balance sheet as of December 31, 2020.

The Prior Credit Facility was amended and restated on June 21, 2019 and had a borrowing base of $ 75.0 million when it was terminated.

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

the base rate plus an applicable margin that varies from 1.00 % to 2.00 % per annum.

Quarterly, the Company paid commitment fees assessed at annual rates of 0.50 % on any available portion of the Prior Credit Facility.

Asset Retirement Obligations

1 unchanged sentence

Year Ended December 31,

2019 2018 2017

Beginning balance $ 75,016 $ 60,064

8 unchanged sentences

(1) Revisions for the years ended December 31, 2020 and 2019 relate primarily to changes in estimated well lives due to changes in oil and natural gas prices and changes in plugging cost estimates.

(2) Liability settled or disposed for the year ended December 31, 2018 includes $ 26.9 million associated with the Permian Properties sold in November 2018.

Commitments and Contingencies

2 unchanged sentences

At December 31, 2020 the Company's only material commitment in each of the next five years and beyond is its asset retirement obligations.

See Note 12 for additional discussions.

Litigation and Claims.

As previously disclosed, on May 16, 2016, the Debtors filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

The Bankruptcy Court confirmed the Plan on September 9, 2016, and the Debtors subsequently emerged from bankruptcy on October 4, 2016.

for additional discussions.

Legal Proceedings.

As previously disclosed, on May 16, 2016, the Company and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

The Bankruptcy Court confirmed the joint plan of organization (the “Plan”) of the Debtors on September 9, 2016, and the Debtors subsequently emerged from bankruptcy on October 4, 2016.

Pursuant to the Plan, claims against the Company were discharged without recovery in each of the following consolidated cases (the “Cases”):

1 unchanged sentence

Securities Litigation , Case No.

5:12-cv-01341-LRW, USDC, Western District of

5:12-cv-01341-LRW, USDC, Western District of Oklahoma;

• Ivan Nibur, Lawrence Ross, Jase Luna, Matthew Willenbucher, and the Duane & Virginia Lanier Trust v.

3 unchanged sentences

Securities Litigation and Lanier Trust assert claims on behalf of themselves and (i) in In re SandRidge Energy, Inc.

Securities Litigation , a class of all purchasers of SandRidge common stock from February 24, 2011 and November 8, 2012 under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and (ii) in Lanier Trust , a putative class of purchasers of SandRidge Mississippian Trust I and SandRidge Mississippian Trust II common units between April 7, 2011 and November 8, 2012 under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, both based on allegations that defendants, which include certain former officers of the Company and the SandRidge Mississippian Trust I, made misrepresentations or omissions concerning various topics including the

performance of wells operated by the Company in the Mississippian region.

Securities Litigation, a class of all purchasers of SandRidge common stock from February 24, 2011 and November 8, 2012 under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and (ii) in Lanier Trust, a putative class of purchasers of SandRidge Mississippian Trust I and SandRidge Mississippian Trust II common units between April 7, 2011 and November 8, 2012 under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, both based on allegations that defendants, which include certain former officers of the Company and the SandRidge Mississippian Trust I, made misrepresentations or omissions concerning various topics including the performance of wells operated by the Company in the Mississippian region.

Discovery in each of the Cases closed on June 19, 2019.

1 unchanged sentence

Securities Litigation on September

The motion for class certification in Lanier Trust remains pending.

In each of the Cases, lead plaintiffs seek to recover unspecified damages, interest, costs and expenses incurred in the litigation on behalf of themselves and class members.

Although the claims against the Company in each Case have been discharged pursuant to the Plan, the Company remains a nominal defendant in each of the Cases to the extent necessary to allow

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

recovery from applicable insurance policies or proceeds.

In addition, the Company owes indemnity obligations and/or the obligation to advance legal fees, to certain former officers who remain as defendants in each action.

The Company may also be

contractually obligated to indemnify the SandRidge Mississippian Trust I against losses, claims, damages, liabilities and expenses, including reasonable costs of investigation and attorney’s fees and expenses, arising out of the Cases, and such indemnification is not covered by insurance.

The motion for class certification in Lanier Trust remains pending.

On April 2, 2020, the individual defendants and SandRidge Mississippian Trust I filed motions for summary judgment seeking the dismissal of all claims asserted against them in the Lanier Trust matter.

On the same date, the individual defendants filed motions for summary judgment seeking the dismissal of all claims asserted against them In re SandRidge Energy, Inc.

Securities Litigation.

The motions remain pending.

In each of the Cases, lead plaintiffs seek to recover unspecified damages, interest, costs and expenses incurred in the litigation on behalf of themselves and class members.

Although the claims against the Company in each Case have been discharged pursuant to the Plan, the Company remains a nominal defendant.

The Company may also be contractually obligated to indemnify two former officers who are defendants and the SandRidge Mississippian Trust I against losses, claims, damages, liabilities and expenses, including reasonable costs of investigation and attorney’s fees and expenses, which it is required to advance, arising out of the Cases, although the Company disputes any such obligations.

Such indemnification is not covered by insurance with respect to the Trust.

As of October 2020, we have exhausted all remaining insurance coverage for the costs of indemnification and expect no further reimbursements.

In light of the status of the Cases, and the facts, circumstances and legal theories relating thereto, the Company is not able to determine the likelihood of an outcome in either case or provide an estimate of any reasonably possible loss or range of possible loss related thereto.

However, considering the erosion of insurance coverage available to the Company, such losses, if incurred, could be material.

However, considering the exhaustion of insurance coverage available to the Company, such losses, if incurred, could be material.

The Company has not established any liabilities relating to the Cases and believes that the plaintiffs’ claims are without merit.

The Company intends to continue to vigorously defend against the Cases in its capacity as a nominal defendant.

In addition to the matters described above, the Company is involved in various lawsuits, claims and proceedings which are being handled and defended by the Company in the ordinary course of business, none of which is deemed to be individually material at this time.

Due to the inherent uncertainty of litigation, however, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our results of operations, financial position or liquidity.

In addition to the matters described above, the Company is involved in various lawsuits, claims and proceedings, which are being handled and defended by the Company in the ordinary course of business.

The Company’s income tax (benefit) provision consisted of the following components (in thousands):

Year Ended December 31,

2019 2018 2017

Federal $ ( 646 ) $ —

State — ( 38 ) ( 30 )

— ( 71 ) ( 8,749 )

Federal — — —

Total (benefit) provision $ ( 646 ) $ —

A reconciliation of the (benefit) provision for income taxes at the statutory federal tax rate to the Company’s actual income tax (benefit) provision is as follows (in thousands):

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Year Ended December 31,

2019 2018 2017

Computed at federal statutory rate $ ( 58,574 ) $ ( 94,354 )

2 unchanged sentences

Stock-based compensation 643 602

Discharge of debt and other reorganization related items — 206 1,018

Return to provision adjustments ( 945 ) ( 6,096 )

Impact of legislative changes — — 243,801

Release of valuation allowance — — ( 8,719 )

Refund of AMT Sequestration ( 646 ) —

Change in valuation allowance 69,285 120,211

Other — ( 38 ) ( 23 )

Total (benefit) provision $ ( 646 ) $ —

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

____________________

(1) The adjustment for the period ended December 31, 2017, primarily related to the Company’s decision to file its 2016 income tax returns using an alternate method than previously estimated with respect to its Chapter 11 related transactions.

Deferred income taxes are provided to reflect the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements.

1 unchanged sentence

The Company continues to closely monitor and weigh all available evidence, including both positive and negative, in making its determination whether to maintain a valuation allowance.

During the year ended December 31, 2017, the Company reduced the valuation allowance associated with deferred tax assets related to alternative minimum tax ("AMT") credits that became realizable as a result of a special tax election.

Accordingly, the Company recorded an income tax benefit of $ 8.7 million in the year ended December 31, 2017.

As a result of the significant weight placed on the Company’s cumulative negative earnings position, the Company continued to maintain the full valuation allowance against its remaining net deferred tax asset at December 31, 2017, December 31, 2018 and December 31, 2019.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

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(1) Includes the Company’s deferred tax liability resulting from its investment in the Royalty Trusts.

The "Tax Cuts and Jobs Act" (the "TCJA") enacted in December 2017 includes significant changes to the taxation of business entities, most of which are effective for taxable years beginning after December 31, 2017.

These changes include, among others, a permanent reduction to the corporate income tax rate from a maximum 35% to a flat 21% rate, expansion of expensing capital expenditures for a period of time, new limitations on the utilization of net operating losses ("NOLs"), and limitations on the deduction of interest expense and executive compensation.

Based on our analysis of the TCJA and guidance currently available we recorded income tax expense of approximately $ 243.8 million in the period ended December 31, 2017, which was completely offset by a decrease in the corresponding valuation allowance.

The provisional amount primarily related to the remeasurement of our gross deferred tax assets and liabilities existing at December 31, 2017 at the appropriate tax rate expected to exist at the time of their reversal.

We completed our analysis of the impact of the TCJA and recorded an immaterial adjustment to income tax expense in the year ended December 31, 2018, which was completely offset by an increase in the corresponding valuation allowance.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Internal Revenue Code (“IRC”) Section 382 addresses company ownership changes and specifically limits the utilization of certain deductions and other tax attributes on an annual basis following an ownership change.

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The Company's ability to use NOLs and other tax attributes to reduce taxable income and income taxes could be materially impacted by a future IRC 382 ownership change.

Future transactions involving the

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Company's stock including those outside of the Company's control could cause an IRC 382 ownership change resulting in a limitation on tax attributes currently not limited and a more restrictive limitation on tax attributes currently subject to the previous IRC 382 limitation.

Future transactions involving the Company's stock including those outside of the Company's control could cause an IRC 382 ownership change resulting in a limitation on tax attributes currently not limited and a more restrictive limitation on tax attributes currently subject to the previous IRC 382 limitation.

As of December 31, 2020, the Company had approximately $ 1.4 billion of federal NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation.

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The number of years open for state tax audits varies, depending on the state, but is generally from three to five years .

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

The CARES Act provides relief to corporate taxpayers by permitting a five year carryback of 2018-2020 NOLs, removing the 80% limitation on the carryback of those NOLs, increasing the Section 163(j) 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerates refunds for minimum tax credit carryforwards.

Further, on December 27, 2020, the President of the United States signed into law the Consolidated Appropriations Act, 2021 (“Appropriations Act”).

During the year ended December 31, 2020, no material adjustments were made to provision amounts recorded as a result of the enactment of the CARES Act or the Appropriations Act.

In July 2020, the U.S.

Treasury Department released final and proposed regulations on IRC Section 163(j) which limits business interest expense deductions.

These regulations apply to tax years beginning January 1, 2021.

However, taxpayers may choose to apply these regulations to tax years beginning after December 31, 2017.

The Company plans to adopt the final regulations for the year ended December 31, 2020.

This does not result in any material impact to the provision.

Common Stock and Performance Share Units.

At December 31, 2020, the Company had 35.9 million shares of common stock, par value $ 0.001 per share, issued and outstanding, including 0.1 million shares of unvested restricted stock awards, and 250.0 million shares of common stock authorized.

The Company also had restricted stock awards and an immaterial amount of performance share units and stock options outstanding at December 31, 2019 as discussed further in Note 17.

Since the fourth quarter of 2016, the Company has issued approximately 4.7 million Series A warrants and 2.0 million Series B warrants to certain holders of general unsecured claims as defined in the Plan.

The Company also has 0.2 million of performance share units and 0.1 million stock options outstanding at December 31, 2020 as discussed further in Note 17.

These warrants are exercisable until October 4, 2022 for one share of common stock per warrant at initial exercise prices of $ 41.34 and $ 42.03 per share, respectively, subject to adjustments pursuant to the terms of the warrants.

The warrants contain customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Tax Benefits Preservation Plan .

On July 1, 2020, the Board declared a dividend distribution of one right (a “Right”) for each outstanding share of Company common stock, par value $ 0.001 per share to stockholders of record at the close of business on July 13, 2020.

Each Right entitles its holder, under certain circumstances, to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock of the Company, par value $ 0.001 per share, at an exercise price of $ 5.00 per Right, subject to adjustment.

The description and terms of the Rights are set forth in the tax benefits preservation plan, dated as of July 1, 2020, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (and any successor rights agent, the “Rights Agent”).

The Company adopted the Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its tax net operating losses (the “NOLs”) and certain other tax benefits to reduce potential future U.S.

federal income tax obligations.

The NOLs are a valuable asset to the Company, which may inure to the benefit of the Company and its stockholders.

However, if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), its ability to fully utilize the NOLs and certain other tax benefits will be substantially limited and the timing of the usage of the NOLs and such other benefits could be substantially delayed, which could significantly impair the value of those assets.

Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five-percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period.

The Tax Benefits Preservation Plan is intended to prevent against such an “ownership change” by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.

Subject to certain exceptions, the Rights become exercisable and trade separately from Common Stock only upon the “Distribution Time,” which occurs upon the earlier of:

• the close of business on the tenth (10th) day after the “Stock Acquisition Date,” which is (a) the first date of public announcement that a person or group of affiliated or associated persons (with certain exceptions, an “Acquiring Person”) has acquired, or obtained the right or obligation to acquire, beneficial ownership of 4.9% or more of the outstanding shares of Common Stock (with certain exceptions) or (b) such other date, as determined by the Board, on which a person or group has become an Acquiring Person, or

• the close of business on the tenth (10th) business day (or later date as may be determined by the Board prior to such time as any person or group becomes an Acquiring Person) following the commencement of a tender offer or exchange offer which, if consummated, would result in a person or group becoming an Acquiring Person.

Any existing stockholder or group that beneficially owns 4.9% or more of Common Stock has been grandfathered at its current ownership level, but the Rights will not be exercisable if, at any time after the announcement of the Tax Benefits Preservation Plan, such stockholder or group increases its ownership of Common Stock by one share of Common Stock.

Certain synthetic interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended, are treated as beneficial ownership of the number of shares of Common Stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of Common Stock are directly or indirectly held by counterparties to the derivatives contracts.

Until the earlier of the Distribution Time and the Expiration Time, the surrender for transfer of any shares of Common Stock will also constitute the transfer of the Rights associated with those shares.

As soon as practicable after the Distribution Time, separate rights certificates will be mailed to holders of record of Common Stock as of the close of business on the Distribution Time.

From and after the Distribution Time, the separate rights certificates alone will represent the Rights.

Except as otherwise provided in the Tax Benefits Preservation Plan, only shares of Common Stock issued prior to the Distribution Time will be issued with Rights.

The Rights are not exercisable until the Distribution Time.

The Tax Benefits Preservation Plan will expire on the earliest of:

(i) the close of business on the day following the certification of the voting results of the Company’s 2021 annual meeting of stockholders or any prior special meeting of stockholders, if at such stockholder meeting a proposal to approve this Agreement has not been passed by the affirmative vote of the holders of at least majority of the shares of Common Stock entitled to vote at the 2021 annual meeting of stockholders or

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

any other meeting of the stockholders of the Company duly held prior to such meeting, (ii) the time at which the Rights are redeemed pursuant to the Tax Benefits Preservation Plan, (iii) the time at which the Rights are exchanged pursuant to the Tax Benefits Preservation Plan, (iv) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in Section 13(f) of the Tax Benefits Preservation Plan, at which time, the Rights are terminated, (v) the time at which the Board determines that the NOLs are utilized in all material respects or that an ownership change under Section 382 would not adversely impact in any material respect the time period in which the Company could use the NOLs, or materially impair the amount of the NOLs that could be used by the Company in any particular time period, for applicable tax purposes and (vi) the Close of Business on July 1, 2023 (the earliest of (i), (ii), (iii), (iv), (v), and (vi) being herein referred to as the “Expiration Time”).

In the event that any person or group (other than certain exempt persons) becomes an Acquiring Person (a “Flip-in Event”), each holder of a Right (other than any Acquiring Person and certain related parties, whose Rights automatically become null and void) will have the right to receive, upon exercise, shares of Common Stock having a value equal to two times the exercise price of the Right.

In the event that, at any time following the Stock Acquisition Date, any of the following occurs (each, a “Flip-over Event”):

• the Company consolidates with, or merges with and into, any other entity, and the Company is not the continuing or surviving entity

• any entity engages in a share exchange with or consolidates with, or merges with or into, the Company, and the Company is the continuing or surviving entity and, in connection with such share exchange, consolidation or merger, all or part of the outstanding shares of Common Stock are changed into or exchanged for stock or other securities of any other entity or cash or any other property;

• the Company sells or otherwise transfers, in one transaction or a series of related transactions, fifty percent (50%) or more of the Company’s assets, cash flow or earning power, each holder of a Right (except Rights which previously have been voided as described above) will have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right.

Shares Withheld for Taxes.

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Year Ended December 31,

2019 2018 2017

Number of shares withheld for taxes 51 56

Value of shares withheld for taxes $ 64 $ 367

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method for all contracts outstanding on that date.

Adoption of ASC 606 had no impact on the Company’s consolidated balance sheet, results of operations, equity or cash flows as of the adoption date.

The following table disaggregates the Company’s revenue by source for the years ended December 31, 2020 and 2019 (in thousands):

Year Ended December 31,

2019 2018 2017

Oil $ 73,621 $ 186,360

3 unchanged sentences

Total revenues $ 114,976 $ 266,845

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Oil, natural gas and NGL revenues.

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The types of awards that may be granted under the Omnibus Incentive Plan include stock options, restricted stock, performance awards and other forms of awards granted or denominated in shares of common stock, as well as certain cash-based awards.

At December 31, 2019, the Company had restricted stock awards and immaterial amounts of performance share units and stock options outstanding under the Omnibus Incentive Plan.

At December 31, 2020, the Company had restricted stock awards, restricted stock units, performance share units and stock options outstanding under the Omnibus Incentive Plan.

Forfeitures for these awards are recognized as they occur.

1 unchanged sentence

The Company’s restricted stock awards are equity-classified awards and are valued based upon the market value of the Company’s common stock on the date of grant.

Vesting for certain restricted stock awards was accelerated in connection with executive terminations and reductions in force in the first quarter of 2018 and second quarter of

Outstanding restricted shares at December 31, 2020 will generally vest over either a one-year period or three-year period with a remaining weighted average contractual period of 0.5 years and have $ 0.3 million of associated unrecognized compensation cost.

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

Additionally, certain restricted stock awards vested in June 2018 as a result of the accelerated vesting event related to the change in the composition of the Board resulting from the 2018 annual meeting discussed in Note 19.

The Company granted additional restricted stock awards in the second half of 2018.

Outstanding restricted shares at December 31, 2019 will generally vest over either a one -year period or three -year period with a remaining weighted average contractual period of 1.3 years and have an insignificant amount of associated unrecognized compensation cost.

The following table presents a summary of the Company’s unvested restricted stock awards:

11 unchanged sentences

Unvested restricted shares outstanding at December 31, 2020 114 $ 3.26

Granted 93 $ 8.06

Vested (1) ( 210 ) $ 16.29

Forfeited / Canceled ( 15 ) $ 16.25

Unvested restricted shares outstanding at December 31, 2019 233 $ 12.66

____________________

(1) The aggregate intrinsic value of restricted stock that vested during 2020 was approximately $ 0.2 million based on the stock price at the time of vesting.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Restricted Stock Units.

The Company’s restricted stock units awards are equity-classified awards and are valued based upon the market value of the Company’s common stock on the date of grant.

Outstanding restricted stock units at December 31, 2020 will generally vest over a three-year period with a remaining weighted average contractual period of 2.42 years and have $ 1.2 million associated unrecognized compensation cost at year in December 31, 2020.

Compensation expense was $ 0.3 million.

The following table presents a summary of the Company's restricted stock units:

Units Weighted-

Average Grant

Date Fair Value

(In thousands)

Unvested restricted stock units outstanding at December 31, 2019 — —

Granted 1,410 1.10

Unvested restricted stock units outstanding at December 31, 2020 1,410 $ 1.10

Performance Share Units.

In February 2017, the Company granted equity-classified awards in the form of performance share units.

The vesting for certain performance share units was accelerated in connection with executive terminations and a reduction in force in the first quarter of 2018.

All remaining units vested in June 2018 as a result of the accelerated vesting as discussed in Note 19 and were settled in shares of the Company's common stock with one share of common stock being issued per performance share unit.

In September 2018, the Company granted an immaterial amount of additional performance share units.

In September 2018, the Company granted an immaterial number of additional performance share units.

The vesting for the performance share units issued in 2018 was accelerated in connection with executive terminations in third quarter of 2020.

In August 2020, the Company granted additional performance share units.

Outstanding performance share units at December 31, 2020 will generally vest over a three year period with a remaining weighted average contractual period of 2.69 years and $ 0.3 million unrecognized compensation cost at year in December 31, 2020.

Compensation expense was immaterial.

The following table presents a summary of the Company's performance share units:

Units Fair Value per Unit at December 31, 2019

Units Weighted-

Average Grant

Date Fair Value

(In thousands)

Unvested performance share units outstanding at December 31, 2018 111 $ 20.41

Forfeited / Canceled ( 16 )

Unvested performance share units outstanding at December 31, 2017 183

Vested ( 19 ) 15.11

Forfeited / Canceled ( 6 )

Unvested performance share units outstanding at December 31, 2019 92 20.41

Granted 205 1.66

Vested (1) ( 92 ) $ 20.41

Forfeited / Canceled —

Unvested performance share units outstanding at December 31, 2020 205 $ 1.66

Incentive-Based Compensation

Performance Units.

In October 2016, the Company granted liability-classified awards in the form of performance units.

The vesting for certain performance units was accelerated in connection with executive terminations and a reduction in force in the first quarter of 2018.

All remaining units vested in June 2018 as a result of the accelerated vesting as discussed in Note 19 and were paid at the issuance value of $ 100 each.

The value for previous vestings was determined by annual scorecard results.

The following table presents a summary of the Company's performance units:

Units Fair Value per Unit at December 31, 2018

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(1) The aggregate intrinsic value of performance share units that vested during 2020 was approximately $ 0.1 million.

Stock Options

The fair value of stock options is estimated on the date of the grant using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table.

Expected volatility is based on historical volatility of the Company’s common stock and other factors.

The Company uses historical data on the exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock-based payments granted.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant.

Generally, stock options granted to employees and

directors vest ratably over three years from the grant date and expire seven years from the date of grant.

Assumptions For the Year Ended December 31, 2020

Risk-free interest rate 1.4 %

Expected dividend yield — %

Expected volatility 46.2 %

Expected term 2.75

The following table presents a summary of the Company's stock option activity for the year ended December 31, 2020:

Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term(years) Aggregate Intrinsic Value (in millions)

(In thousands)

Unvested performance units outstanding at December 31, 2016 87

Vested ( 32 )

Forfeited / Canceled ( 6 )

Unvested performance units outstanding at December 31, 2017 49

Vested ( 48 )

Outstanding at December 31, 2019 — $ — — $ —

Granted 245 —

Forfeited / Canceled ( 154 ) —

Unvested performance units outstanding at December 31, 2018 — $ —

Outstanding at December 31, 2020 (1) 91 $ — 2.68 $ 0.24

Exercisable at December 31, 2020 — $ — — $ —

____________________

(1) All outstanding stock options as of December 31, 2020, are expected to vest.

In February 2020, the Company, granted nonqualified stock options.

As of December 31, 2020, the total unrecognized compensation expense was immaterial and will be recognized over a weighted average period of 2.18 years.

No options vested during the year ended December 31, 2020.

SandRidge Energy, Inc.

5 unchanged sentences

Equity-classified awards:

Restricted stock awards $ 2,526 $ 197 $ 500 $ — $ 3,223

Restricted stock awards and units $ 974 $ 508 $ 40 $ — $ 1,522

Performance share units 211 1,276 — — 1,487

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Performance share units 282 281 — — 563

Total share-based compensation expense 5,354 9,196 3,935 5,791 24,276

Liability-classified awards:

Performance units 756 2,151 558 1,309 4,774

Total share and incentive-based compensation expense 6,110 11,347 4,493 7,100 29,050

Capitalized compensation expense ( 482 ) — — ( 555 ) ( 1,037 )

Share and incentive-based compensation expense, net $ 5,628 $ 11,347 $ 4,493 $ 6,545 $ 28,013

Year Ended December 31, 2017

Equity-classified awards:

Restricted stock awards $ 14,731 $ 1,825 $ — $ — $ 16,556

Performance share units 1,356 — — — 1,356

Stock options 661 12 — — 673

Total share-based compensation expense 3,469 490 500 — 4,459

Liability-classified awards:

Performance units 2,574 — — — 2,574

Total share and incentive-based compensation expense 18,661 1,825 — — 20,486

Capitalized compensation expense ( 204 ) — — — ( 204 )

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(3) Recorded in accelerated vesting of employment compensation in the accompanying consolidated statements of operations.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Incentive and Deferred Compensation Plans

1 unchanged sentence

The Annual Incentive Plan ("AIP") incorporates quantitative performance measures, strategic qualitative goals and competitive target award levels for management and employees for the 2020 and 2019 performance years.

Incentive bonus awards for 2019 will be provided at the discretion of the Board of Directors and will be paid quarterly during 2020.

Payout percentages ranged from 0 % to 200 % of specified target levels based on actual performance in 2018 and 2017.

Incentive bonus awards for 2020 will be provided at the discretion of the Board of Directors and will be paid in 2021.

As of December 31, 2020, the Company had accrued approximately $ 2.6 million for the 2020 AIP.

Payment of $ 7.1 million was made in the first quarter of 2019 for the 2018 performance year.

AIP Payments totaling $ 1.1 million were paid in 2020 for the 2019 performance year.

The Company maintains a 401(k) retirement plan for its employees.

Under this plan, eligible employees may elect to defer a portion of their earnings up to the maximum allowed by IRS.

For the years ended December 31, 2019, 2018, and 2017, the Company made matching contributions to the plan equal to 100 % on the first 10 % of employee deferred wages, excluding incentive compensation, totaling $ 2.2 million, $ 2.8 million, and $ 3.6 million, respectively.

Under this plan, eligible employees may elect to defer a portion of their earnings up to the maximum allowed by the IRS.

For the years ended December 31, 2020 and 2019, the Company made matching contributions to the plan equal to 100 % on the first 10 % of employee deferred wages, excluding incentive compensation, totaling $ 1.1 million and $ 2.2 million, respectively.

The decrease in contributions is due primarily to reductions in force that occ urred in each of those years.

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The Company's matching contributions and related earnings vest based on years of service, with full vesting occurring on the four th anniversary of employment.

Proxy Contest

In the second quarter of 2018, the Company engaged in a proxy contest with its largest shareholder, Carl C.

Icahn and certain affiliated entities, which resulted in the election of a majority of non-incumbent directors to the Company's Board of Directors.

As confirmed by general counsel, the election of a majority of non-incumbent directors nominated in connection with the proxy contest resulted in the accelerated vesting of certain share and incentive-based compensation awards granted to the Company's employees and directors as discussed further in Note 17.

The Company incurred legal, consulting and advisory fees of $ 7.1 million related to the proxy contest during the year ended December 31, 2018.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Employee Termination Benefits

9 unchanged sentences

$ 3,802 $ 990 81 $ 4,792

Year Ended December 31, 2017

Executive Employee Termination Benefits(5) $ 2,500 $ 1,825 96 $ 4,325

Other Employee Termination Benefits 490 — — 490

____________________

(1) On December 12, 2019, the Company's then current CEO, Paul McKinney, separated employment from the Company, and on June 14, 2019, the Company’s then current Executive Vice President, General Counsel and Corporate

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Secretary, Philip Warman, separated employment from the Company.

(1) On July 1, 2020, the Company's then current Chief Financial Officer, Michael A.

Johnson and Chief Operating Officer, John Suter, separated employment from the Company.

As a result, the Company paid cash severance costs and incurred share-based compensation costs associated with these separations during 2020.

(2) On December 12, 2019, the Company's then current CEO, Paul McKinney, separated employment from the Company, and on June 14, 2019, the Company’s then current Executive Vice President, General Counsel and Corporate Secretary, Philip Warman, separated employment from the Company.

As a result, the Company paid cash severance costs and incurred share-based compensation costs associated with these separations during 2019.

(3) As a result of a reduction in workforce in the second quarter of 2019, certain employees received termination benefits including cash severance and accelerated share-based compensation upon separation of service from the Company.

(3) On February 8, 2018, the Company’s then current CEO, James Bennett, separated employment from the Company, and on February 22, 2018, the Company’s then current CFO, Julian Bott, also separated employment from the Company.

In accordance with the terms of their respective employment agreements, the Company incurred cash severance costs and share-based compensation costs associated with the accelerated vesting of awards during the first quarter of 2018.

(4) As a result of a reduction in workforce in the first quarter of 2018, certain employees received termination benefits including cash severance and accelerated share and incentive-based compensation vesting upon separation of service from the Company.

(5) Includes cash severance costs and share-based compensation costs associated with the accelerated vesting of awards related to the departure of the Company's former Executive Vice President of Investor Relations and Strategy, Duane Grubert.

(4) Share-based compensation recognized in connection with the accelerated vesting of restricted stock awards and performance share units upon the departure of certain executives and the reductions in workforce in 2020 and 2019 reflects the remaining unrecognized compensation expense associated with these awards at the date of termination.

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One share of the Company’s common stock was issued per performance share unit.

As of December 31, 2020 there were no longer any legacy employment contracts.

See Note 17 for additional discussion of the Company’s share-based compensation awards.

(Loss) Earnings per Share

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Loss per Share

The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted (loss) earnings per share:

Net (Loss) Income Weighted Average Shares (Loss) Earnings Per Share

Net Loss Weighted Average Shares Loss Per Share

(In thousands, except per share amounts)

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Diluted loss per share $ ( 449,305 ) 35,427 $ ( 12.68 )

Year Ended December 31, 2017

Basic earnings per share $ 47,062 32,442 $ 1.45

Effect of dilutive securities

Restricted stock awards — 221

Performance share units(2) — —

Warrants(2) — —

Diluted earnings per share $ 47,062 32,663 $ 1.44

____________________

(1) No incremental shares of potentially dilutive restricted stock awards, performance share units or warrants were included for the year ended December 31, 2020 and 2019, as their effect was antidilutive under the treasury stock method.

(2) No incremental shares of potentially dilutive performance share units or warrants were included for the year ended December 31, 2017, as their effect was antidilutive under the treasury stock method.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

See Note 17 for discussion of the Company’s share-based compensation awards.

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The Company’s capitalized costs for oil and natural gas activities consisted of the following (in thousands):

2019 2018 2017

Oil and natural gas properties

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Net oil and natural gas properties capitalized costs $ 106,222 $ 379,340

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development

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Year Ended December 31,

2019 2018 2017

Acquisitions of properties

4 unchanged sentences

Total cost incurred $ 8,269 $ 161,553

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Results of Operations for Oil and Natural Gas Producing Activities

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Year Ended December 31,

2019 2018 2017

Revenues $ 114,450 $ 266,104

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Total expenses 322,222 667,159

Income (loss) before income taxes ( 401,055 ) 109,272 121,803

Income tax (benefit) expense (1) ( 105,477 ) 28,520 47,722

Loss before income taxes ( 207,772 ) ( 401,055 )

Income tax benefit (1) ( 51,750 ) ( 105,477 )

Results of operations for oil and natural gas producing activities (excluding corporate overhead and interest costs) $ ( 156,022 ) $ ( 295,578 )

____________________

(1) Income tax (benefit) expense is hypothetical and is calculated by applying the Company’s statutory tax rate to (loss) income before income taxes attributable to our oil and natural gas producing activities, after giving effect to permanent differences and tax credits.

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• the quality and quantity of available data and the engineering and geological interpretation of that data;

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

• estimates regarding the amount and timing of future costs, which could vary considerably from actual costs;

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The following table represents the Company’s estimate of proved oil, natural gas and NGL reserves attributable to the Company’s net interest in oil and natural gas properties, all of which are located in the continental United States, based upon the evaluation by the Company and its independent petroleum engineers of pertinent geoscience and engineering data in accordance with the SEC’s regulations.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

professional training in petroleum engineering to ensure that the Company consistently applies rigorous professional standards and the reserve definitions prescribed by the SEC.

Cawley, Gillespie & Associates, Ryder Scott and Netherland Sewell, independent oil and natural gas consultants, prepared the estimates of proved reserves of oil, natural gas and NGLs for over 90 % of the Company’s net interest in oil and natural gas properties as of the end of one or more of 2019, 2018 and 2017.

Cawley, Gillespie & Associates, Ryder Scott and Netherland Sewell are independent petroleum engineers, geologists, geophysicists and petrophysicists and do not own an interest in the Company or its properties and are not employed on a contingent basis.

Over 90 % of the Company’s proved reserves estimates have been prepared by independent reservoir engineers and geoscience professionals and are reviewed by members of the Company’s senior management with professional training in petroleum engineering to ensure that the Company consistently applies rigorous professional standards and the reserve definitions prescribed by the SEC.

Cawley, Gillespie & Associates and Ryder Scott, independent oil and natural gas consultants, prepared the estimates of proved reserves of oil, natural gas and NGLs for over 90 % of the Company’s net interest in oil and natural gas properties as of the end of one or more of 2020 and 2019.

Cawley, Gillespie & Associates and Ryder Scott are independent petroleum engineers, geologists, geophysicists and petrophysicists and do not own an interest in the Company or its properties and are not employed on a contingent basis.

The remaining proved reserves were based on Company estimates.

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2020 Activity .

Proved reserves decreased from 89.9 MMBoe at December 31, 2019 to 36.9 MMBoe at December 31, 2020, primarily as a result of downward revisions of 45.0 MMBoe associated with the decrease in year-end SEC commodity prices for oil and natural gas consisting of ( 27.8 MMBoe from removing PUDs, and 17.3 MMBoe from remaining proved reserves).

The Company also recorded 2020 production totaling 8.7 MMBoe and a decrease of 9.0 MMBoe attributable to well shut-ins, sales and other revisions.

These reductions were partially offset by an 8.6 MMBoe increase associated with reduction in expenses and other commercial improvements, and purchases of 1.1 MMBoe of proved reserves.

2019 Activity .

Proved reserves decreased from 160.2 MMBoe at December 31, 2018 to 89.9 MMBoe at December 31, 2019, primarily as a result of downward revisions of 50.9 MMBoe associated with the decrease in year-end SEC prices for oil and natural gas consisting of (i) 39.8 MMBoe from downgrading PUDs, and (ii) 11.1 MMBoe from remaining proved reserves.

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These reductions were partially offset by a 12.6 MMBoe increase associated with converting undeveloped well locations from SRLs to planned XRLs as well as reduced future estimated development capital on these undeveloped locations.

2018 Activity.

Proved reserves decreased from 177.6 MMBoe at December 31, 2017 to 160.2 MMBoe at December 31, 2018, primarily as a result of a one-time adjustment to future workover costs in the Company's Mississippian Lime wells.

As its large population of Mississippian Lime wells transition into late-life mature production, the Company has experienced increasing operating costs which have been incorporated into its 2018 reserve report.

This estimate of future costs contributed to a 24.9 MMBoe decrease associated with shorter economic lives.

The Company also recorded a decrease of 8.3 MMBoe attributable to well performance and a decrease of 6.6 MMBoe due to divestitures of proved reserves.

These reductions were partially offset by the acquisition of 15.4 MMBoe associated with the purchase of interests in Mid-Continent wells, extensions and discoveries of 19.3 MMBoe from successful drilling in the North Park Basin and to a lesser extent the NW STACK play in the Mid-Continent, as well as recording proved undeveloped reserves at an increased well density in the North Park Basin.

2017 Activity.

During 2017, the Company recorded extensions and discoveries of 19.4 MMBoe, primarily from successful drilling in its NW STACK play in the Mid-Continent area and its North Park Basin properties, sold 1.9 MMBoe of proved reserves, and recorded upward revisions of 10.9 MMBoe, primarily as a result of significantly higher commodity prices in 2017 and minor revisions due to well performance.

SandRidge Energy, Inc.

7 unchanged sentences

Revisions of previous estimates ( 25,530 ) ( 9,277 ) ( 142,239 ) ( 58,514 )

Acquisitions of new reserves 18 70 683 202

Extensions and discoveries 635 94 2,127 1,084

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Acquisitions of new reserves 74 437 3,391 1,076

Extensions and discoveries 11,148 2,320 35,185 19,332

Sales of reserves in place ( 163 ) ( 111 ) ( 1,827 ) ( 579 )

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As of December 31, 2020 8,485 11,245 102,893 36,879

Revisions of previous estimates ( 25,530 ) ( 9,277 ) ( 142,239 ) ( 58,514 )

Extensions and discoveries 635 94 2,127 1,084

Sales of reserves in place ( 297 ) ( 223 ) ( 2,308 ) ( 905 )

Production ( 3,519 ) ( 2,910 ) ( 33,164 ) ( 11,956 )

As of December 31, 2019 35,308 15,859 232,307 89,885

Proved developed reserves

1 unchanged sentence

As of December 31, 2020 8,485 11,245 102,893 36,879

As of December 31, 2019 14,078 14,532 200,853 62,086

Proved undeveloped reserves

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As of December 31, 2020 — — — —

As of December 31, 2019 21,230 1,327 31,454 27,799

_________________

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At December 31,

2019 2018 2017

Oil (per Bbl) $ 36.54 $ 50.63

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Natural gas (per Mcf) $ 0.87 $ 1.16

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

• future development and production costs are determined based upon actual cost at year-end;

1 unchanged sentence

• a discount factor of 10% per year is applied annually to the future net cash flows.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The summary below presents the Company’s future net cash flows relating to proved oil, natural gas and NGL reserves based on the standardized measure in ASC Topic 932 (in thousands).

2019 2018 2017

Future cash inflows from production $ 471,038 $ 2,254,530

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____________________

(1) Includes abandonment costs.

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Year Ended December 31,

2019 2018 2017

Beginning present value $ 364,290 $ 1,045,603

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Accretion of discount 36,429 101,778

Net change in income taxes — 56 23

Purchases of reserves in-place 4,744 —

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(1) The change in estimated future development costs and revisions of previous quantity estimates primarily reflect a decrease in planned PUD development due to declining year end SEC prices for oil and natural gas.

The elimination of PUD development for the year ended December 31, 2020 resulted in a decrease of $ 73.8 million.

(2) The change in timing differences and other are related to revisions in the Company’s estimated time of production and development.

3 unchanged sentences

Notes to Consolidated Financial Statements

Quarterly Financial Results (Unaudited)

The Company’s operating results for each quarter of 2019 and 2018 are summarized below (in thousands, except per share data).

Fourth Quarter

Total revenues $ 73,236 $ 75,388 $ 58,369 $ 59,852

Loss from operations(1)(2)(3) $ ( 4,261 ) $ ( 12,556 ) $ ( 181,707 ) $ ( 248,243 )

Net loss(1)(2)(3) $ ( 5,277 ) $ ( 13,284 ) $ ( 181,602 ) $ ( 249,142 )

Loss applicable per share to SandRidge Energy, Inc.

common stockholders

Basic $ ( 0.15 ) $ ( 0.38 ) $ ( 5.12 ) $ ( 7.01 )

Diluted $ ( 0.15 ) $ ( 0.38 ) $ ( 5.12 ) $ ( 7.01 )

____________________

(1) Includes loss (gain) on derivative contracts of $ 0.2 million, $( 1.8 ) million and $ 0.5 million for the first, third, and fourth quarters, respectively.

(2) Includes employee termination benefits of $ 4.5 million and $ 0.3 million for the second quarter and fourth quarters, respectively.

(3) Includes full cost ceiling limitation impairments of $ 165.5 million and $ 244.1 million for the third and fourth quarters, respectively.

Total revenues $ 87,128 $ 79,462 $ 97,660 $ 85,145

(Loss) income from operations(1)(2) $ ( 41,967 ) $ ( 33,685 ) $ 12,430 $ 52,847

Net (loss) income(1)(2) $ ( 40,894 ) $ ( 34,074 ) $ 11,715 $ 54,178

(Loss applicable) income available per share to SandRidge Energy, Inc.

common stockholders

Basic $ ( 1.18 ) $ ( 0.97 ) $ 0.33 $ 1.53

Diluted $ ( 1.18 ) $ ( 0.97 ) $ 0.33 $ 1.53

____________________

(1) Includes loss (gain) on derivative contracts of $ 18.3 million, $ 30.1 million, $ 11.3 million and $( 42.6 ) million for the first, second, third and fourth quarters, respectively.

(2) Includes employee termination benefits of $ 31.6 million for the first quarter, accelerated vesting of employment compensation of $ 6.5 million for the second quarter, and proxy contest costs of $ 7.2 million for the second quarter.

Subsequent Events

On February 4, 2020, the Company issued Workers Adjustment and Retraining Notification (WARN) Act notices to approximately 63 of its 120 Oklahoma City based employees as a result of its workforce reduction at its corporate headquarters.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

On March 3, 2021, the Company named Mr.

Grayson Pranin, formerly its Vice President for Reserves and Engineering, as Senior Vice President and Chief Operating Officer.

The Company also named Mr.

Salah Gamoudi, the Company’s Chief Financial Officer and Chief Accounting Officer, as a Senior Vice President.

It also named Mr.

Dean Parrish, formerly its Director of Operations, as its Vice President of Operations.

On February 5, 2021, the Company sold all of our oil and natural gas properties and related assets of the North Park Basin in Colorado for a purchase price of $ 47 million.

The sale closed for net proceeds of $ 39.7 million in cash, which is net of effective to closing date adjustments.

North Park Basin ("NPB") for the year ended December 31, 2020, represented $ 31.1 million, or 27.0 % of the Company's $ 115.0 million total consolidated Revenues, NPB represented $ 9.1 million, or 20.9 % of the Company's $ 43.4 million consolidated Lease operating expense, it represented $ 1.8 million, or 18.7 % of the Company's $ 9.6 million consolidated Production, ad valorem and other taxes, it represented $ 1.5 million or 18.1 % of the Company's consolidated capital expenditures of $ 8.3 million and NPB represented 0.9 MMBoe, or 10.3 % of the Company's consolidated total production volumes of 8.7 MMBoe.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data