What changed in this filing

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Item 1. Financial Statements

2021-05-12 compared with 2020-11-05 · 146 added, 294 removed, 347 unchanged (56% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)

September 30,

(In thousands)

2021 December 31, 2020

3 unchanged sentences

Accounts receivable, net 18,963 19,576

Derivative contracts — 114

Prepaid expenses 2,841 2,890

12 unchanged sentences

Accounts payable and accrued expenses $ 42,280 $ 51,426

Current maturities of long-term debt 12,000 —

Derivative contracts 3,088 —

Asset retirement obligation 15,937 16,467

9 unchanged sentences

250,000 shares authorized;

35,906 issued and outstanding at September 30, 2020 and 35,772 issued and outstanding at December 31, 2019

36,135 issued and outstanding at March 31, 2021 and 35,928 issued and outstanding at December 31, 2020

Warrants 88,520 88,520

8 unchanged sentences

(In thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Oil, natural gas and NGL $ 33,623 $ 40,139

Other 129 181 526 561

Total revenues 33,623 40,329

8 unchanged sentences

(Gain) loss on derivative contracts — ( 10,226 )

Other operating expense, net ( 116 ) 23 269 142

(Gain) loss on sale of assets ( 19,713 ) —

Other operating (income) expense, net ( 48 ) 277

Total expenses ( 1,439 ) 53,088

Loss from operations ( 48,051 ) ( 181,707 ) ( 276,196 ) ( 198,524 )

Income (loss) from operations 35,062 ( 12,759 )

Other income (expense)

2 unchanged sentences

Total other income (expense) ( 19 ) ( 561 )

Loss before income taxes ( 48,749 ) ( 181,602 ) ( 277,844 ) ( 200,163 )

Income (loss) before income taxes 35,043 ( 13,320 )

Income tax expense (benefit) — ( 650 )

Net loss $ ( 48,749 ) $ ( 181,602 ) $ ( 277,198 ) $ ( 200,163 )

Loss per share

Net income (loss) $ 35,043 $ ( 12,670 )

Net income (loss) per share

Basic $ 0.97 $ ( 0.36 )

8 unchanged sentences

(In thousands)

Additional Paid-In Capital

Accumulated Deficit

Nine Months Ended September 30, 2020

Warrants Additional Paid-In Capital

Accumulated Deficit Total

Shares Amount

Three Months Ended March 31, 2021

Balance at December 31, 2020

35,928 $ 36 6,734 $ 88,520 $ 1,062,220 $ ( 1,022,710 ) $ 128,066

Issuance of stock awards, net of cancellations 6 — — — — — —

Stock-based compensation — — — — 236 — 236

— — — — 185 — 185

Issuance of common stock for general unsecured claims 201 — — — — — —

38 — — — — — —

Issuance of warrants for general unsecured claims — — 247 — — — —

— — 47 — — — —

Cash paid for tax withholdings on vested stock awards

— — — — ( 1 ) — ( 1 )

Cash paid for tax obligations on vested stock awards — — — — ( 19 ) — ( 19 )

— — — — — 35,043 35,043

Balance at March 31, 2021 36,135 $ 36 6,981 $ 88,520 $ 1,062,437 $ ( 987,667 ) $ 163,326

Stock-based compensation — — — — 583 — 583

Issuance of stock awards, net of

cancellations

55 — — — — — —

Cash paid for tax withholdings on vested

stock awards — — — — ( 1 ) — ( 1 )

Net loss — — — — ( 215,779 ) ( 215,779 )

Balance at June 30, 2020 35,865 $ 36 6,706 $ 88,520 $ 1,060,019 $ ( 973,806 ) $ 174,769

Stock-based compensation

— — — — 2,004 — 2,004

Issuance of stock awards, net of cancellations

41 — — — — — —

Cash paid for tax withholdings on vested stock awards

— — — — ( 62 ) — ( 62 )

— — — — — ( 48,749 ) ( 48,749 )

Balance at September 30, 2020

35,906 36 6,706 88,520 1,061,961 ( 1,022,555 ) 127,962

Additional Paid-In Capital

Accumulated Deficit

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

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

Common stock issued for general unsecured claims 38 — — — — — —

Stock-based compensation — — — — 185 — 185

— — — — 1,073 — 1,073

Issuance of warrants for general unsecured claims — — 47 — — — —

— — 1 2 ( 2 ) — —

Cumulative effect of adoption of

— — — — — ( 57 ) ( 57 )

Cash paid for tax obligations on vested stock awards — — — — ( 1 ) — ( 1 )

— — — — — ( 12,670 ) ( 12,670 )

Balance at March 31, 2020

Issuance of stock awards, net of

cancellations

35,810 $ 36 6,706 $ 88,520 $ 1,059,437 $ ( 758,027 ) $ 389,966

Stock-based compensation — — — — 2,170 — 2,170

Cash paid for whithholdings on vested

— — — — ( 205 ) — ( 205 )

Net loss — — — — — ( 13,284 ) ( 13,284 )

Balance at June 30, 2019 35,762 $ 36 6,605 $ 88,518 $ 1,058,200 $ ( 314,613 ) $ 832,141

Cancellation of stock awards, net of issuances

( 32 ) — — — —

Stock-based compensation

— — — — 862 — 862

Cash paid for tax withholdings on vested stock awards

— — — — ( 157 ) — ( 157 )

— — — — — ( 181,602 ) ( 181,602 )

Balance at September 30, 2019

35,730 36 6,605 88,518 1,058,905 ( 496,215 ) 651,244

The accompanying notes are an integral part of these condensed consolidated financial statements .

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ ( 277,198 ) $ ( 200,163 )

Net income (loss) $ 35,043 $ ( 12,670 )

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

3 unchanged sentences

Debt issuance costs amortization 16 159

Write off of debt issuance costs — 142

(Gain) loss on derivative contracts — ( 10,226 )

Cash received on settlement of derivative contracts — 4,087

Loss (gain) on sale of assets ( 100 ) —

Gain on sale of assets ( 19,713 ) —

Stock-based compensation 235 169

Other 114 ( 119 )

Changes in operating assets and liabilities ( 5,305 ) 686

Net cash provided by operating activities 27,356 95,529

Net cash provided by (used in) operating activities 14,331 18,103

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures for property, plant and equipment ( 3,094 ) ( 5,452 )

Acquisition of assets ( 3,276 ) 236

Purchase of other property and equipment ( 59 ) —

Proceeds from sale of assets 37,238 989

5 unchanged sentences

Debt issuance costs ( 74 ) —

Cash paid for tax withholdings on vested stock awards ( 63 ) ( 362 )

Cash paid for tax obligations on vested stock awards ( 19 ) ( 1 )

Net cash provided by (used in) financing activities ( 167 ) ( 11,867 )

31 unchanged sentences

impairment tests of long-lived assets;

the carrying value of unproved oil and natural gas properties and other property, plant and equipment;

the carrying value of unproved oil and natural gas properties;

depreciation, depletion and amortization;

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and accrued revenue and related receivables.

Although management believes the estimates used in the areas noted above are reasonable, actual results could differ significantly.

Although management believes the estimates used in the areas noted above are reasonable, actual results could differ significantly from those estimates.

Going Concern Consideration.

The accompanying condensed 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.

The Company previously disclosed circumstances that gave rise to substantial doubt about the Company’s ability to continue as a going concern.

Those conditions were resolved as a result of the Company executing previously disclosed initiatives.

These initiatives include reducing our 2020 capital expenditures, personnel and non-personnel cost reductions and the sale of the company headquarters for net proceeds of $ 35.4 million.

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;

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.

The Company adopted this ASU on January 1, 2021 using an applied prospective basis;

however, the impact was not material upon adoption.

2 unchanged sentences

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.

This ASU provides optional practical expedients and exceptions for applying GAAP provisions to contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("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 will determine the applicable provisions of ASU 2020-04.

SANDRIDGE ENERGY, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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):

The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted, and will be applied on a prospective basis.

The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

Fair Value Measurements

The Company measures and reports certain assets and liabilities on a fair value basis and has classified and disclosed its fair value measurements using the levels of the fair value hierarchy noted below.

The carrying values of cash, restricted cash, accounts receivable, prepaid expenses, certain other current assets and other assets, accounts payable and accrued expenses, other current liabilities and other long-term obligations included in the unaudited condensed consolidated balance sheets approximated fair value at September 30, 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.

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 unaudited condensed consolidated balance sheets approximated fair value at March 31, 2021 and December 31, 2020.

Additionally, the carrying amount of debt associated with borrowings outstanding under the credit facility dated November 30, 2020 ("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.

No other adjustments to fair value were required for other property, plant and equipment for the three and nine-month periods ended September 30, 2020 and 2019.

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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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 had assets classified in Level 2 of the hierarchy as of September 30, 2020 and December 31, 2019, as described below.

Level 2 Fair Value Measurements

Commodity Derivative Contracts.

The fair values of the Company’s oil and natural gas fixed price swaps are based upon inputs that are either readily available in the public market, such as oil and natural gas futures prices, volatility factors and discount rates, or can be corroborated from active markets.

As applicable, the fair values of the Company’s oil and natural gas fixed price swaps are based upon inputs that are either readily available in the public market, such as oil and natural gas futures prices, volatility factors and discount rates, or can be corroborated from active markets.

Fair value is determined through the use of a discounted cash flow model or option pricing model using the applicable inputs discussed above.

1 unchanged sentence

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Fair Value - Recurring Measurement Basis

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

September 30, 2020

Fair Value Measurements

Assets/Liabilities at Fair Value

Commodity derivative contracts $ — $ 3,915 $ — $ — $ 3,915

December 31, 2019

Fair Value Measurements

Assets/Liabilities at Fair Value

Commodity derivative contracts

$ — $ 114 $ — $ — $ 114

____________________

(1) Represents the effect of netting assets and liabilities for counterparties with which the right of offset exists.

The Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements during the three and nine-month periods ended September 30, 2020 and 2019.

There were no open commodity derivative contracts as of March 31, 2021 and December 31, 2020.

The Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements during the three-month periods ended March 31, 2021 and 2020.

Commodity Derivatives

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On occasion, the Company has attempted to manage this risk on a portion of its forecasted oil or natural gas production sales through the use of commodity derivative contracts.

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.

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.

Commodity derivative contracts are settled on a monthly basis, and the commodity derivative contract valuations are adjusted to the mark-to-market valuation on a quarterly basis.

The following table summarizes derivative activity for the three and nine-month periods ended September 30, 2020, and 2019 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

There were no open commodity derivative contracts as of March 31, 2021 and December 31, 2020.

Historically, the Company has not designated any of its derivative contracts as hedges for accounting purposes.

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

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

Commodity derivative contracts were settled on a monthly basis, and the commodity derivative contract valuations were adjusted to the mark-to-market valuation on a quarterly basis.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table summarizes derivative activity for the three-month periods ended March 31, 2021, and 2020 (in thousands):

Three Months Ended March 31,

(Gain) loss on commodity derivative contracts $ — $ ( 10,226 )

1 unchanged sentence

Master Netting Agreements and the Right of Offset.

The Company has master netting agreements with all of its commodity derivative counterparties and has presented its derivative assets and liabilities with the same counterparty on a net basis in the unaudited condensed consolidated balance sheets.

As applicable, The Company historically had master netting agreements with all of its commodity derivative counterparties and has presented its derivative assets and liabilities with the same counterparty on a net basis in the unaudited condensed consolidated balance sheets.

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 September 30, 2020, the counterparties to the Company's open commodity derivative contracts consisted of three financial

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 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 credit facility as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020

Gross Amounts

Gross Amounts Offset

Amounts Net of Offset

Financial Collateral

Derivative contracts - current

$ 3,915 $ — $ 3,915 $ — $ 3,915

December 31, 2019

Gross Amounts

Gross Amounts Offset

Amounts Net of Offset

Financial Collateral

Derivative contracts - current

$ 114 $ — $ 114 $ — $ 114

At September 30, 2020, the Company's open derivative contracts consisted of natural gas commodity derivative contracts under which we will receive a fixed price for the contract and pay a floating market price to the counterparty over a specified period for a contracted volume.

These commodity derivative contracts consisted of the following:

Notional (MMBtu) Weighted Average Fixed Price per Unit

Natural Gas Price Swaps:

October 2020 1,240,000 $ 2.14

Natural Gas Price Swaps:

November 2020 - December 2020 2,135,000 $ 2.54

Natural Gas Price Swaps:

January 2021 - December 2021 10,950,000 $ 2.61

Because we have not designated any of our derivative contracts as hedges for accounting purposes, changes in the fair value of our derivative contracts are recognized as gains and losses in current period earnings.

As a result, our current period earnings may be significantly affected by changes in the fair value of our commodity derivative contracts.

Changes in fair value are principally measured based on a comparison of future prices to the contract price at the period-end.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Fair Value of Derivatives

The following table presents the fair value of the Company’s derivative contracts as of September 30, 2020 and December 31, 2019, on a gross basis without regard to same counterparty netting (in thousands):

Type of Contract Balance Sheet Classification September 30,

2020 December 31, 2019

Derivative assets

Oil price swaps Derivative contracts-current $ — $ 114

Derivative liabilities

Natural gas price swaps Derivative contracts-current ( 3,088 ) —

Natural gas price swaps Derivative contracts-noncurrent ( 827 ) —

Total net derivative contracts $ ( 3,915 ) $ 114

See Note 2 for additional discussion of the fair value measurement of the Company’s derivative contracts.

There were no open commodity derivatives contracts as of March 31, 2021 and December 31, 2020.

Because we did not designate any of our derivative contracts as hedges for accounting purposes, changes in the fair value of our derivative contracts were recognized as gains and losses in current period earnings.

As a result, and as applicable, our current period earnings could have been significantly affected by changes in the fair value of our commodity derivative contracts.

Changes in fair value were principally measured based on a comparison of future prices to the contract price at the end of the period.

Property, Plant and Equipment

Property, plant and equipment consists of the following (in thousands):

September 30,

2021 December 31, 2020

8 unchanged sentences

80,095 106,222

Land 200 4,400

Electrical infrastructure 121,819 121,819

9 unchanged sentences

$ 181,152 $ 209,340

See Note 5 for discussion of impairment of property, plant and equipment, and Note 6 for discussion of the sale of the Company's headquarters in Oklahoma City, OK, which is included in buildings and structures in the table above as of December 31, 2019.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

See Note 5 for discussion of impairment of property, plant and equipment.

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

The Company analyzes various property, plant and equipment for impairment when certain triggering events occur by comparing the carrying values of the assets to their estimated fair values.

The full cost pool ceiling limitation and estimated fair values of other assets were determined in accordance with the policies discussed in Note 1.

In the three-month period ended September 30, 2020, we recorded a total impairment charge of $ 44.0 million, which related to the full cost ceiling limitation impairment charge.

In the nine - month period ended September 30, 2020, we recorded a total impairment charge of $ 253.8 million, which included a full cost ceiling limitation impairment charge of $ 215.8 million, and an asset impairment charge of $ 38.0 million.

The ceiling limitation impairment charges recorded in the nine-month period ended September 30, 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.

No impairment was recorded for the three and nine-month periods ended September 30, 2019.

Calculation of the full cost ceiling test is based on, among other factors, average prices for the trailing twelve-month period determined by reference to the first-day-of-the-month index prices ("SEC prices") as adjusted for price differentials and other contractual arrangements.

The SEC prices utilized in the calculation of proved reserves included in the full cost ceiling test at September 30, 2020 were $ 43.40 per barrel of oil and $ 1.97 per Mcf of natural gas, before price differential adjustments.

The SEC prices utilized in the calculation of proved reserves included in the full cost ceiling test at June 30, 2020 were $ 47.17 per barrel of oil and $ 2.07 per Mcf of natural gas, before price differential adjustments.

The asset impairment charge of $ 38.0 million recorded in the nine-month period ended September 30, 2020 resulted from writing 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 Condensed Consolidated Balance Sheets 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 Condensed Consolidated Balance Sheets 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 in the three and nine-month periods ended September 30, 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.

Acquisitions and Disposal of Assets

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.

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.

The Company analyzes various property, plant and equipment for impairment when certain triggering events occur

SANDRIDGE ENERGY, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

by comparing the carrying values of the assets to their estimated fair values.

The full cost pool ceiling limitation and estimated fair values of midstream and other assets were determined in accordance with the policies discussed in Note 1 as applicable.

In the three - month period ended March 31, 2021, we did not record a full cost ceiling limitation impairment charge .

The Company recorded a full cost ceiling limitation impairment of $ 8.0 million for the three-month period ended March 31, 2020, which resulted from various factors including a decrease in the trailing twelve-month weighted average natural gas price in the first quarter of 2020.

The SEC prices utilized in the calculation of proved reserves included in the full cost ceiling test at March 31, 2021 were $ 40.01 per barrel of oil and $ 2.16 per Mcf of natural gas, before price differential adjustments.

Acquisitions and Divestitures

North Park Basin Sale

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

The sale closed for net proceeds of $ 39.7 million in cash, which amounts to the purchase price of $ 47 million net of effective date to close date adjustments.

Consequently, the Company allocated a portion of the full cost pool net book value, using the income approach, to the divested oil and gas properties and recognized a reduction of full cost pool assets of $ 22.0 million and a reduction of $ 4.6 million to its non-full cost pool assets.

As the sale significantly altered the relationship between capitalized costs and proved reserves, the Company recognized a $ 19.7 million gain related to the assets sold.

The gain represents net proceeds of $ 39.7 million coupled with the release of revenues in suspense of $ 0.5 million and the relief of asset retirement obligations of $ 6.1 million offset by the reduction of $ 26.6 million in oil and gas properties related to NPB.

For the three-months ended March 31, 2021, NPB represented $ 3.2 million, or 9.4 % of the Company's $ 33.6 million total consolidated Revenues, NPB represented $ 0.9 million, or 11.6 % of the Company's $ 8.0 million consolidated Lease operating expense, it represented $ 0.2 million, or 11.4 % of the Company's $ 2.2 million consolidated Production, ad valorem and other taxes and NPB represented 0.1 MMBoe, or 4.1 % of the Company's consolidated total production volumes of 1.6 MMBoe.

For the three-months ended March 31, 2020, NPB represented $ 12.8 million, or 31.6 % of the Company's $ 40.3 million total consolidated Revenues, NPB represented $ 3.5 million or 22.7 % of the Company's $ 15.6 million consolidated Lease operating expense, it represented $ 0.8 million, or 24.1 % of the Company's $ 3.2 million consolidated Production, ad valorem and other taxes and NPB represented 0.3 MMBoe, or 12.8 % of the Company's consolidated total production volumes of 2.6 MMBoe.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following (in thousands):

September 30,

2021 December 31, 2020

6 unchanged sentences

Total accounts payable and accrued expenses $ 42,280 $ 51,426

Credit Facility.

As of September 30, 2020, the Company had a borrowing base of $ 75.0 million under its credit facility, with $ 12.0 million outstanding and $ 4.3 million in outstanding letters of credit, which reduces availability under the credit facility on a dollar-for-dollar basis.

This leaves $ 58.7 million available to be drawn under the credit facility.

The next borrowing base redetermination is expected to occur during the fourth quarter of 2020.

The credit facility matures on April 1, 2021.

The interest rate on outstanding borrowings under the 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 three and nine-month periods ended September 30, 2020, the weighted average interest rate paid for borrowings outstanding under the credit facility was approximately 2.9 % and 3.2 %, respectively.

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

The Company must also continue 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.

As of September 30, 2020, the Company was in compliance with all applicable covenants and had a consolidated total net leverage ratio of - 0.01 and consolidated interest coverage ratio of 27.13 .

SANDRIDGE ENERGY, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Long-Term Debt

Credit Facility.

On November 30, 2020 the Company entered into a $ 30.0 million credit facility with a related party and affiliate of Icahn Enterprises and Icahn Agency Services LLC, as administrative agent.

As of March 31, 2021 and December 31, 2020, the Company had a $ 20.0 million term loan outstanding under the New Credit Facility.

The New Credit Facility consists of a $ 10.0 million revolving loan facility and a $ 20 million term loan facility.

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

At March 31, 2021, the Company had $ 10.0 million available to be drawn under the revolving loan facility.

The New Credit Facility matures on November 30, 2023.

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 three-months ended March 31, 2021, the weighted average interest rate paid for borrowings outstanding under the New Credit Facility was approximately 2.6 %.

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.

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 March 31, 2021, the Company was in compliance with all applicable covenants and had a consolidated total net leverage ratio of ( 0.18 ) and consolidated interest coverage ratio of 42.86 .

During the three-months ended March 31, 2021, the Company paid a related party, an affiliate of Icahn Enterprises, $ 0.2 million of interest expense which is included on the Interest expense, net line item on the Condensed Consolidated Statement of Operations.

The total outstanding balance of the New Credit facility is recorded in long-term debt on the Condensed Consolidated Balance Sheet as of March 31, 2021.

Commitments and Contingencies

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

SandRidge Mississippian Trust I, et al., Case No.

Mississippian Trust I, et al ., Case No.

5:15-cv-00634-SLP, USDC, Western District of Oklahoma

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The lead plaintiffs in both In re SandRidge Energy, Inc.

11 unchanged sentences

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

The Company also 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 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.

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

12 unchanged sentences

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.

As a result of the significant weight placed on the Company's cumulative negative earnings position, the Company continued to maintain a full valuation allowance against its net deferred tax asset at September 30, 2020.

As a result, the Company had no federal or state income tax expense and recorded an insignificant income tax benefit for the nine-month period ended September 30, 2020.

The benefit is related to previously sequestered alternative minimum tax (AMT) refund amounts released to the Company during the current quarter.

As a result, the Company had no federal or state income tax expense or benefit for the three-month period ended March 31, 2021and recorded an insignificant income tax benefit for the year ended December 21, 2020.

The benefit is related to previously sequestered alternative minimum tax (AMT) refund amounts released to the Company during 2020.

The Company has no remaining AMT credits to be refunded.

The Company had no federal or state income tax expense or benefit for the nine-month period ended September 30, 2019.

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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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.

On July 1, 2020, the Company entered into a Tax Benefits Preservation Plan (defined below) to protect shareholder value against a possible limitation on the Company's ability to use its NOLs.

See Note 15 for more information.

As of March 31, 2021, the Company had approximately $ 1.7 billion of federal NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation.

Of the $ 1.7 billion of federal NOL carryforwards, $ 0.8 billion expire during the years 2025 through 2037, while $ 0.9 billion do not have an expiration date.

Additionally, the Company had federal tax credits in excess of $ 33.5 million which begin expiring in 2029.

The Company did not have unrecognized tax benefits at March 31, 2021 and December 31, 2020.

The Company’s only taxing jurisdiction is the United States (federal and state).

The Company’s tax years 2017 to present remain open for federal examination.

Additionally, tax years 2005 through 2015 remain subject to examination for determining the amount of remaining federal net operating loss and other carryforwards.

Additionally, tax years 2005 through 2017 remain subject to examination for the purpose of determining the amount of federal NOL and other carryforwards.

The number of years open for state tax audits varies, depending on the state, but are 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, along with a few other provisions.

During the nine months ended September 30, 2020, no material adjustments were made to provision amounts recorded as a result of the enactment of the CARES Act.

In July 2020, the U.S.

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

The Company is currently in the process of evaluating the effect of these regulations on its consolidated financial statements and related disclosures.

The Company adopted the final regulations for the year ended December 31, 2020.

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

Common Stock, Performance Share Units, and Stock Options .

At March 31, 2021, the Company had approximately 250.0 million shares of common stock authorized, 36.1 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at March 31, 2021, the Company had approximately 0.1 million shares of unvested restricted stock awards, 1.5 million shares of unvested restricted stock units, 0.1 million stock options outstanding, and 0.2 million of unvested performance share units.

The Company has issued approximately 4.9 million Series A warrants and 2.1 million Series B warrants that are exercisable until October 4, 2022 for one share of common stock per warrant at initial prices of $ 41.34 and $ 42.03 per share,

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Common Stock, Performance Share Units, and Stock Options .

At September 30, 2020, the Company had approximately 35.9 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at September 30, 2020, the Company had approximately 0.1 million shares of unvested restricted stock awards, 1.4 million shares of unvested restricted stock units, 0.1 million unvested stock options, and 0.2 million unvested performance share units.

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

respectively, subject to adjustments pursuant to the terms of the warrants, to certain holders of general unsecured claims as defined in the Plan.

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

3 unchanged sentences

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.

The Company adopted the Tax Benefits Preservation Plan, as amended on March 16, 2021, 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.

The NOLs are a valuable 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.

6 unchanged sentences

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.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

4 unchanged sentences

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 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”).

(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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 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.

3 unchanged sentences

• 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.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table disaggregates the Company’s revenue by source for the three and nine-month periods ended September 30, 2020 and 2019:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The fol lowing table disaggregates the Company’s revenue by source for the three-month periods ended March 31, 2021 and 2020:

Three Months Ended March 31,

(In thousands)

$ 15,548 $ 28,654

4,983 6,362 12,508 28,886

5,493 7,754 14,347 34,700

129 181 526 561

Total revenues

1 unchanged sentence

Oil, natural gas and NGL revenues.

A majority of the Company’s revenues come from sales of oil, natural gas and NGLs and are recorded at a point in time when control of the oil, natural gas and NGL production passes to the customer at the inlet of the processing plant or pipeline, or the delivery point for onloading to a delivery truck.

A majority of the Company’s revenues come from sales of oil, natural gas and NGLs are recorded at a point in time when control of the oil, natural gas and NGL production passes to the customer at the inlet of the processing plant or pipeline, or the delivery point for onloading to a delivery truck.

As the Company’s customers obtain control of the production prior to selling it to other end customers, the Company presents its revenues on a net basis, rather than on a gross basis.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Pricing for the Company’s oil, natural gas and NGL contracts is variable and is based on either an index price, net of deductions, or a percentage of the sales price obtained by the customer, which is also based on index prices.

6 unchanged sentences

Revenues receivable are typically collected the month after the Company delivers the related production to its customers.

As of September 30, 2020, and December 31, 2019, the Company had revenues receivable of $ 11.7 million and $ 22.3 million, respectively, and did not record any bad debt expense on revenues receivable during the three and nine-month periods ended September 30, 2020 and 2019.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

As of March 31, 2021, and December 31, 2020, the Company had revenues receivable of $ 14.2 million and $ 12.8 million, respectively, and did no t record any bad debt expense on revenues receivable during the three-month periods ended March 31, 2021 and 2020.

Employee Termination Benefits

Certain employees received termination benefits including cash severance and accelerated share-based compensation upon separation of service from the Company as a result of a reduction in workforce in the three and nine-month periods ended September 30, 2020 and 2019.

The following tables presents a summary of employee termination benefits for the three and nine-month periods ended September 30, 2020 and 2019 (in thousands):

Certain employees received termination benefits including cash severance and accelerated share-based compensation upon separation of service from the Company as a result of the sale of North Park assets and other employee terminations during the three-month period ended March 31, 2021 and as a result of a reduction in workforce during the three-month period ended March 31, 2020.

The following tables presents a summary of employee termination benefits for the three-month periods ended March 31, 2021 and 2020 (in thousands):

Share-Based Compensation (1) Number of Shares

Total Employee Termination Benefits

Three Months Ended September 30, 2020

Executive Employee Termination Benefits $ 1,005 $ 1,784 159 $ 2,789

Other Employee Termination Benefits 395 — — 395

$ 1,400 $ 1,784 159 $ 3,184

Three Months Ended September 30, 2019

Executive Employee Termination Benefits

$ — $ — — $ —

Other Employee Termination Benefits

$ — $ — — $ —

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Executive Employee Termination Benefits $ — $ — — $ —

1 unchanged sentence

$ 32 $ 17 — $ 49

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Executive Employee Termination Benefits $ 3 $ — — $ 3

2 unchanged sentences

____________________

(1) Share-based compensation recognized in connection with the accelerated vesting of restricted stock awards due to the reduction in workforce in the three and nine - month periods ended September 30, 2020 and 2019 and reflects the remaining unrecognized compensation expense associated with these awards at the date of termination.

(1) Share-based compensation recognized in connection with the accelerated vesting of restricted stock awards due to the sale of the North Park assets for the three-month period ended March 31, 2021 and as a result of the reduction in workforce for the three-month period ended March 31, 2020.

The remaining unrecognized compensation expense associated with these awards at the date of termination was recorded as employee termination benefits.

The unrecognized compensation expense was calculated using the grant date fair value for restricted stock awards.

As of September 30, 2020 there were no longer any legacy employment contracts.

One share of the Company’s common stock was issued per restricted stock award.

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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) Earnings

Earnings (Loss) per Share

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

Earnings (Loss)

Weighted Average Shares

(Loss) Earnings Per Share

Earnings (Loss) Per Share

(In thousands, except per share amounts)

Three Months Ended September 30, 2020

Basic loss per share

$ ( 48,749 ) 35,783 $ ( 1.36 )

Effect of dilutive securities

Restricted stock awards(1) — —

Performance share units(1) — —

Warrants(1) — —

Stock options(1) — —

Diluted loss per share

Three Months Ended March 31, 2021

Basic earnings per share

$ 35,043 36,156 (1) $ 0.97

Three Months Ended September 30, 2019

Basic loss per share $ ( 181,602 ) 35,491 $ ( 5.12 )

Effect of dilutive securities

Restricted stock units — 1,166

Restricted stock awards — 88

Performance share units (2) — —

Warrants(1) — —

Stock options — 29

Diluted earnings per share (3)

Nine Months Ended September 30, 2020

Basic loss per share

$ 35,043 37,439 $ 0.94

Effect of dilutive securities

Restricted stock awards(1) — —

Performance share units(1) — —

Warrants(1) — —

Stock options(1) — —

Diluted loss per share

$ ( 277,198 ) 35,649 $ ( 7.78 )

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Basic loss per share $ ( 12,670 ) 35,551 $ ( 0.36 )

2 unchanged sentences

Performance share units — —

Warrants(1) — —

Diluted loss per share (4) $ ( 12,670 ) 35,551 $ ( 0.36 )

____________________

(1) No incremental shares of potentially dilutive restricted stock awards, performance share units, warrants or stock options were included for the three and nine-month periods ended September 30, 2020 and 2019, as their effect was antidilutive under the treasury stock method.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(1) Includes 0.2 million of performance share units that are no longer contingently issuable.

(2) The performance share unit awards are contingently issuable and are considered in the calculation of diluted earnings per share.

The Company assesses the number of awards that would be issuable, if any, under the terms of the agreement if the end of the reporting period were the end of the contingency period.

(3) The incremental shares of potentially dilutive restricted stock units, restricted stock awards and stock options were included for the three-month periods ended March 31, 2021 as their effect was dilutive under the treasury stock method.

(4) No incremental shares of potentially dilutive restricted stock awards, performance share units, warrants or stock options were included for the three-month periods ended March 31, 2020, as their effect was antidilutive under the treasury stock method.

Subsequent Events

Royalty Trust Right of First Refusal

The Company is a party to the Amended and Restated Trust Agreement of SandRidge Mississippian Trust I (the “SDT Trust”), dated April 12, 2011, by and among the Company, the Bank of New York Mellon Trust Company, N.A., and the Corporation Trust Company (the “Trust Agreement”).

Pursuant to the Trust Agreement, the Company has a right of first refusal with respect to any sale of assets of the SDT Trust to a third party following the occurrence of certain events (a “Triggering Event”).

On October 23, 2020, the SDT Trust announced the Trust will be required to dissolve and commence winding up beginning as of the close of business on November 13, 2020.

Overriding Royalty Interest Acquisition

On April 22, 2021, the Company announced the acquisition of all the overriding royalty interest assets of SandRidge Mississippian Trust I (the “Trust”).

The gross purchase price is $ 4.9 million (net $ 3.6 million, given the Company's 26.9 % ownership of the Trust).

Tabl e of Contents

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-Q

Item 1. Financial Statements