What changed in this filing

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Item 1. Financial Statements

2021-08-11 compared with 2021-05-12 · 168 added, 113 removed, 380 unchanged (43% of the section changed)

34 unchanged sentences

250,000 shares authorized;

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

36,560 issued and outstanding at June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Oil, natural gas and NGL $ 34,196 $ 16,448 $ 67,819 $ 56,587

Other — 207 — 397

Total revenues 34,196 16,655 67,819 56,984

33 unchanged sentences

Shares Amount

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Balance at December 31, 2020

7 unchanged sentences

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

Issuance of stock awards, net of cancellations 425 1 — — ( 1 ) — —

Stock options exercised and Stock-based compensation — — — — 584 — 584

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

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

Cash paid for tax obligations on vested stock awards — — — — ( 594 ) — ( 594 )

Net Income — — — — 16,252 16,252

Balance at June 30, 2021 36,560 $ 37 6,981 $ 88,520 $ 1,062,426 $ ( 971,415 ) $ 179,568

Additional Paid-In Capital

Accumulated Deficit

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

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

5 unchanged sentences

Balance at March 31, 2020 35,810 $ 36 6,706 $ 88,520 $ 1,059,437 $ ( 758,027 ) $ 389,966

Issuance of stock awards, net of cancellations 55 — — — — — —

Stock-based compensation — — — — 583 — 583

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

— — — — — ( 215,779 ) ( 215,779 )

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

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

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Cash received on settlement of derivative contracts — 10,577

Gain on sale of assets ( 19,713 ) —

(Gain) loss on sale of assets ( 19,713 ) 78

Stock-based compensation 799 749

3 unchanged sentences

Capital expenditures for property, plant and equipment ( 4,389 ) ( 6,814 )

Acquisition of Assets ( 3,545 ) —

Purchase of other property and equipment ( 59 ) —

6 unchanged sentences

Debt issuance costs ( 81 ) —

Proceeds from exercise of stock options 21 —

Cash paid for tax obligations on vested stock awards ( 613 ) ( 1 )

43 unchanged sentences

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.

Recently Adopted Accounting Pronouncements.

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

The accompanying condensed consolidated financial statements are prepared in accordance with GAAP 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.

Recently Adopted Accounting Pronouncements 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.

1 unchanged sentence

however, the impact was not material upon adoption.

Recent Accounting Pronouncements Not Yet Adopted.

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

Recent Accounting Pronouncements Not Yet Adopted 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.

8 unchanged sentences

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 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.

14 unchanged sentences

Fair Value - Recurring Measurement Basis

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.

There were no open commodity derivative contracts as of June 30, 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 and six-month periods ended June 30, 2021 and 2020.

Commodity Derivatives

1 unchanged sentence

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.

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

There were no open commodity derivative contracts as of June 30, 2021 and December 31, 2020.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

2 unchanged sentences

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,

The following table summarizes derivative activity for the three and six-month periods ended June 30, 2021, and 2020 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(Gain) loss on commodity derivative contracts $ — $ ( 2,241 ) $ — $ ( 12,467 )

3 unchanged sentences

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.

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

There were no open commodity derivatives contracts as of June 30, 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.

9 unchanged sentences

1,453,269 1,481,914

Less accumulated depreciation, depletion and impairment

( 1,376,754 ) ( 1,375,692 )

accumulated depreciation, depletion and impairment ( 1,370,544 ) ( 1,375,692 )

Net oil and natural gas properties

12 unchanged sentences

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

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 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 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.

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 March 31, 2021 were $ 40.01 per barrel of oil and $ 2.16 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, 2021 were $ 49.78 per barrel of oil and $ 2.43 per Mcf of natural gas, before price differential adjustments.

In the three and six - month periods ended June 30, 2021, we did no t record a full cost ceiling limitation impairment charge.

The Company recorded a total impairment charge of $ 201.8 million for the three-month period ended June 30, 2020, which included a full cost ceiling limitation impairment charge of $ 163.8 million, and an impairment charge of $ 38.0 million to write down the value of the Company's office headquarters.

The Company recorded a total impairment charge of $ 209.8 million for the six-month period ended June 30, 2020, which included a full cost ceiling limitation impairment charge of $ 171.8 million, and an impairment charge of $ 38.0 million to write down the value of the Company's office headquarters.

The June 30, 2020, asset impairment charge of $ 38.0 million 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.

Prior to the sale of the corporate headquarters building, the Company was required to report the building at its carrying amount, as a result 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 Divestitures

Overriding Royalty Interest Assets

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

The gross purchase price was $ 4.9 million (net $ 3.6 million, given our 26.9 % ownership of the Trust).

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.

On February 5, 2021, the Company sold all of its oil and natural gas properties and related assets of the North Park Basin (“NPB”or “North Park”), 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.

2 unchanged sentences

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.

For the three-months ended June 30, 2021, NPB did not have an impact on our financials due to the sale of the NPB assets.

For the six-months ended June 30, 2021, NPB represented $ 3.2 million, or 4.7 % of the Company's $ 67.8 million total consolidated Revenues, NPB represented $ 0.9 million, or 5.4 % of the Company's $ 17.2 million consolidated Lease operating expense, it represented $ 0.2 million, or 5.3 % of the Company's $ 4.7 million consolidated Production, ad valorem and other taxes and NPB represented 0.1 MMBoe, or 2.0 % of the Company's consolidated total production volumes of 3.4 MMBoe.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

For the three-months ended June 30, 2020, NPB represented $ 4.6 million, or 27.8 % of the Company's $ 16.7 million total consolidated Revenues, NPB represented $ 2.2 million or 25.6 % of the Company's $ 8.7 million consolidated Lease operating expense, it represented $ 0.3 million, or 16.7 % of the Company's $ 1.9 million consolidated Production, ad valorem and other taxes and NPB represented 0.2 MMBoe, or 10.3 % of the Company's consolidated total production volumes of 2.2 MMBoe.

For the six-months ended June 30, 2020, NPB represented $ 17.4 million, or 30.5 % of the Company's $ 57.0 million total consolidated Revenues, NPB represented $ 5.8 million or 23.7 % of the Company's $ 24.3 million consolidated Lease operating expense, it represented $ 1.1 million, or 21.4 % of the Company's $ 5.1 million consolidated Production, ad valorem and other taxes and NPB represented 0.6 MMBoe, or 11.7 % of the Company's consolidated total production volumes of 4.7 MMBoe.

Accounts Payable and Accrued Expenses

8 unchanged sentences

Total accounts payable and accrued expenses $ 42,896 $ 51,426

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Long-Term Debt

1 unchanged sentence

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.

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

As of June 30, 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.

At June 30, 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.

On July 26, 2021, the Company entered into an amendment (the “First Amendment”) to the New Credit Facility.

Pursuant to the First Amendment, the Company will be permitted to grant liens securing its obligations under swap contracts with certain counterparties to the extent such swap contracts are permitted under the Credit Agreement and approved by the Company’s board of directors.

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 %.

During the three and six-months ended June 30, 2021, the weighted average interest rate paid for borrowings outstanding under the New Credit Facility was approximately 2.60 % and 2.62 %, respectively.

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).

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The New Credit Facility is secured by (i) first-priority mortgages on at least 95 % of the PV-9 pricing of all the 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, (iii) a first-priority security interest in the cash, cash equivalents, deposit, securities and other similar accounts, and (iv) 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.

As of June 30, 2021, 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 59.73 .

During the three and six-months ended June 30, 2021, the Company paid a related party, an affiliate of Icahn Enterprises, $ 0.1 million and $ 0.3 million, respectively 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 June 30, 2021 .

Commitments and Contingencies

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”):

• In re SandRidge Energy, Inc.

Securities Litigation , Case No.

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.

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.

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.

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

Following a hearing on class certification in each of the Cases on September 6, 2019, the court granted class certification in In re SandRidge Energy, Inc.

Securities Litigation on September 30, 2019.

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.

The Company is subject to various legal proceedings and claims arising in the ordinary course of its business.

The Company has provided accruals where necessary for contingent liabilities, based on ASC 450, Contingencies , when it has determined that a liability is probable and reasonably estimable.

The Company continuously assesses the potential liability related to the Company's pending litigation and revises its estimates when additional information becomes available.

Additionally, the Company currently expenses all legal costs as they are incurred.

As previously disclosed in the Company's 2020 Form 10-K, there are certain ongoing Cases (as that term is defined in the Company's 2020 Form 10-K).

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.

Although the claims against the Company in each Case have been discharged pursuant to the Plan, the Company remains a nominal defendant because of a technical connection with the Cases, and is necessary for the court to decide all issues and make a proper judgement.

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.

2 unchanged sentences

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.

Accordingly, the Company has not established or accrued any liabilities relating to the Cases and believes that the plaintiffs' claims are without merit.

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.

SANDRIDGE ENERGY, INC.

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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 March 31, 2021 and December 31, 2020.

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.

As a result, the Company had no federal or state income tax expense or benefit for the three and six-month periods ended June 30, 2021 and 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.

6 unchanged sentences

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 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.

As of June 30, 2021, the Company had approximately $ 1.6 billion of federal NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation.

Of the $ 1.6 billion of federal NOL carryforwards, $ 0.8 billion expire during the years 2025 through 2037, while $ 0.8 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 did not have unrecognized tax benefits at June 30, 2021 and December 31, 2020.

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

2 unchanged sentences

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

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 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.

At June 30, 2021, the Company had approximately 250.0 million shares of common stock authorized, 36.6 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at June 30, 2021, the Company had approximately 0.1 million shares of unvested restricted stock awards, 1.1 million shares of unvested restricted stock units, 0.1 million stock options outstanding, and an immaterial number 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, 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.

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

The Tax Benefits Preservation Plan.

1 unchanged sentence

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, 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.

1 unchanged sentence

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.

However, if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended, 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.

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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.

Until the earlier of the Distribution Time and the Expiration Time (as defined herein), 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.

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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

SANDRIDGE ENERGY, INC.

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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.

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

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”).

In the event that any person or group (other than certain exempt persons) becomes an Acquiring Person, 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:

• 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.

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,

• 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.

The following table disaggregates the Company’s revenue by source for the three and six-month periods ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

$ 14,666 $ 11,554 $ 30,214 $ 40,208

10,625 1,591 19,481 7,525

8,905 3,303 18,124 8,854

Total revenues

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

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.

As of June 30, 2021, and December 31, 2020, the Company had revenues receivable of $ 14.5 million and $ 12.8 million, respectively, and did no t record any bad debt expense on revenues receivable during the three and six-month periods ended June 30, 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 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 March 31, 2021

During the three month period ended June 30, 2021, no employees received 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 the sale of North Park assets and other employee terminations during the six-month period ended June 30, 2021 and as a result of a reduction in workforce during the three and six-month periods ended June 30, 2020.

The following tables presents a summary of employee termination benefits for the three and six-month periods ended June 30, 2021 and 2020 (in thousands):

Cash Share-Based Compensation (1) Number of Shares Total Employee Termination Benefits

Three Months Ended June 30, 2021

Executive Employee Termination Benefits $ — $ — — $ —

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$ — $ — — $ —

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Executive Employee Termination Benefits

$ 1 $ — — $ 1

Other Employee Termination Benefits

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$ 1,993 $ — — $ 1,993

(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.

Six Months Ended June 30, 2021

Executive Employee Termination Benefits $ — $ — — $ —

Other Employee Termination Benefits 32 17 — 49

$ 32 $ 17 — $ 49

Six Months Ended June 30, 2020

Executive Employee Termination Benefits $ 4 $ — — $ 4

Other Employee Termination Benefits 5,203 40 4 5,243

$ 5,207 $ 40 4 $ 5,247

____________________

(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 six-month period ended June 30, 2021 and as a result of the reduction in workforce for the three and six-month periods ended June 30, 2020.

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

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Earnings (Loss)

Weighted Average Shares

Earnings (Loss) Per Share

Weighted Average Shares Earnings (Loss) Per Share

(In thousands, except per share amounts)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Basic earnings per share

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Stock options — 38

Diluted earnings share (2)

$ 16,252 37,345 $ 0.44

Three Months Ended June 30, 2020

Basic loss per share $ ( 215,779 ) 35,611 $ ( 6.06 )

Effect of dilutive securities

Restricted stock awards — —

Performance share units — —

Stock options — —

Diluted loss per share (3) $ ( 215,779 ) 35,611 $ ( 6.06 )

Six Months Ended June 30, 2021

Basic earnings per share

$ 51,295 36,187 $ 1.42

Effect of dilutive securities

Restricted stock units — 1,019

Restricted stock awards — 39

Performance share units (1) — —

Stock options — 38

Diluted earnings per share (2)

$ 51,295 37,283 $ 1.38

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Basic loss per share $ ( 228,449 ) 35,581 $ ( 6.42 )

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Performance share units — —

Stock options — —

Diluted loss per share (3) $ ( 228,449 ) 35,581 $ ( 6.42 )

____________________

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

(1) 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.

(2) The incremental shares of potentially dilutive restricted stock units, restricted stock awards and stock options were included for the three and six-month periods ended June 30, 2021 as their effect was dilutive under the treasury stock method.

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Subsequent Events

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).

Share Repurchase Program

In August 2021, the Company's Board of Directors (the “Board”) approved the initiation of a share repurchase program (the "Program") authorizing the Company to purchase up to an aggregate of $ 25.0 million of the Company’s common stock beginning as early as August 16, 2021.

The Program is in accordance with Rule 10b-18 of the Exchange Act.

Subject to applicable rules and regulations, repurchases under the Program can be made from time to time in open markets at the Company's discretion and in compliance with safe harbor provisions, or in privately negotiated transactions.

The Program does not require any specific number of shares to be acquired, and can be modified or discontinued by the Board at any time.

First Amendment to Credit Agreement

On July 26, 2021, the Company entered into an amendment (the “First Amendment”) to the New Credit Facility.

Appointment of Chief Executive Officer

In connection with the resignation of the Company's previous Chief Executive Officer ("CEO"), the Board appointed Grayson Pranin as President and CEO effective July 16, 2021 and in addition will maintain his role as Chief Operating Officer.

Pranin’s compensation will be determined at a later time.

Pranin, age 41, has held the role of Senior Vice President and Chief Operating Officer since March 3, 2021.

Prior to that Mr.

Pranin most recently served as the Company’s Vice President of Engineering and Reservoir beginning June 1, 2020, and has served in various engineering, operational and leadership roles with the Company since December 2011.

Prior to joining the Company, Mr.

Pranin served in various engineering and operational roles for Pioneer Natural Resources from June 2010 to November 2011.

Pranin has served his country as a non-commissioned and commissioned officer in the U.S.

Army Engineering Corps.

Pranin received his Bachelor of Science from the University of Nevada at Reno.

Resignation of Chief Executive Officer and Director

On July 9, 2021, Carl F.

submitted his resignation from his positions as CEO, President and as a member of the Board of the Company, effective July 16, 2021 in order to pursue another career opportunity.

Giesler did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

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