What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-10 compared with 2021-03-04 · 363 added, 243 removed, 933 unchanged (39% of the section changed)

2 unchanged sentences

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets at December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019

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

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements Cash Flows for the Years Ended December 31, 2021, 2020 and 2019

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Based on management’s assessment using the COSO criteria, management concluded the Company’s internal control over financial reporting was effective as of December 31, 2021.

/s/ GRAYSON PRANIN

/s/ SALAH GAMOUDI

President and Chief Executive Officer

Grayson Pranin

President, Chief Executive Officer and Chief Operating Officer

Salah Gamoudi

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

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

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

and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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

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

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

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

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

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

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

Accordingly, we express no such opinion.

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

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

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

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

Critical Audit Matter Description

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

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

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

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

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

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

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

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

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

The Company’s proved and natural gas properties are amortized using the unit-of-production method.

The development of the Company’s oil and natural gas reserve quantities requires management to make significant estimates and assumptions related to rates of production.

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

Changes in these assumptions could materially affect the Company’s estimated reserve quantities and the amount of depletion.

The proved oil and natural gas properties balance was $1.5 billion, and the associated accumulated depreciation, depletion and impairment was $1.4 billion as December 31, 2021.

Depreciation and depletion- oil and natural gas expense was $9.4 million for the year ended December 31, 2021.

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

How the Critical Audit Matter Was Addressed in the Audit

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

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

• We tested the operating effectiveness of controls over the Company’s estimation of oil and natural gas reserve quantities.

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

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

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

– Evaluating the experience, qualifications and objectivity of the Company’s independent reserve engineers including the methodologies used to estimate oil and natural gas reserve quantities.

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

/s/ DELOITTE & TOUCHE LLP

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on Internal Control over Financial Reporting

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

and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 10, 2022 expressed an unqualified opinion on those financial statements.

Basis for Opinion

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

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

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

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

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

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

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

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

Definition and Limitations of Internal Control over Financial Reporting

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

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

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

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

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

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

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

March 10, 2022

SandRidge Energy, Inc.

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Accounts receivable, net 21,505 19,576

Derivative contracts — 114

Prepaid expenses 626 2,890

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Asset retirement obligations 17,606 16,467

Derivative contracts 21 —

Other current liabilities 627 984

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Year Ended December 31,

2021 2020 2019

(In thousands, except per share amounts)

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Employee termination benefits 49 8,433 4,792

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

Loss (gain) on derivative contracts 2,251 ( 5,765 ) ( 1,094 )

(Gain) loss on sale of assets ( 18,952 ) ( 100 ) —

Other operating (income) expense ( 382 ) 306 ( 608 )

Total expenses 54,795 388,483 713,612

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

Income (loss) from operations 114,087 ( 273,507 ) ( 446,767 )

Other (expense) income

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Total other (expense) income 2,651 ( 4,492 ) ( 2,538 )

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

Income (loss) before income taxes 116,738 ( 277,999 ) ( 449,305 )

Income tax benefit — ( 646 ) —

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

Loss per share

Net income (loss) $ 116,738 $ ( 277,353 ) $ ( 449,305 )

Net income (loss) per share

Basic $ 3.21 $ ( 7.77 ) $ ( 12.68 )

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and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Changes in Stockholders’ Equity

Common Stock Warrants Additional

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

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

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

Cumulative effect of adoption of

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

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

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

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

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

Issuance of stock awards, net of cancellations 547 1 — — ( 1 ) — —

Common stock issued for general unsecured claims 200 — — — — — —

Stock-based compensation — — — — 1,417 — 1,417

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

Cash paid for tax obligations on vested stock awards — — — ( 899 ) — ( 899 )

Net Income — — — — — 116,738 116,738

Balance at December 31, 2021 36,675 $ 37 6,981 $ 88,520 $ 1,062,737 $ ( 905,972 ) $ 245,322

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

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Year Ended December 31,

2021 2020 2019

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income (loss)

$ 116,738 $ ( 277,353 ) $ ( 449,305 )

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

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

Provision for doubtful accounts

( 2,329 ) 3,202 16

Depreciation, depletion and amortization

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Write off of debt issuance costs

Gain on derivative contracts

Loss (gain) on derivative contracts

2,251 ( 5,765 ) ( 1,094 )

Cash received (paid) on settlement of derivative contracts

Cash (paid) received on settlement of derivative contracts

( 2,230 ) 5,879 6,266

Gain on sale of assets

( 18,952 ) ( 100 ) —

Stock-based compensation

1,394 3,012 4,254

144 149 ( 187 )

Changes in operating assets and liabilities increasing (decreasing) cash

841 5,867 15,829

Prepaid expenses

2,264 452 ( 714 )

Other current assets

— 458 ( 301 )

Other assets and liabilities, net

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( 3,545 ) ( 3,701 ) 236

Purchase of other property and equipment ( 59 ) — —

Proceeds from sale of assets

38,160 37,556 1,593

Net cash provided by (used) in investing activities

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( 1,024 ) ( 1,233 ) ( 1,374 )

Cash paid for tax withholdings on vested stock awards

Proceeds from exercise of stock options

Cash paid for tax withholding on vested stock awards

( 899 ) ( 64 ) ( 367 )

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CASH, CASH EQUIVALENTS and RESTRICTED CASH, beginning of year

28,266 5,968 19,645

CASH, CASH EQUIVALENTS and RESTRICTED CASH, end of year

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All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications.

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.

These reclassifications have no effect on the Company’s previously reported results of operations.

Use of Estimates.

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

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

In addition, the Company maintains funds related to collateralize letters of credit and credit cards issued by lenders that were party to the 2017 Credit Facility.

Accounts Receivable, Net.

The Company has receivables for sales of oil, natural gas and NGLs, as well as receivables related to the drilling, completion, and production of oil and natural gas, which have a contractual maturity of one year or less.

An allowance for doubtful accounts has been established based on management’s review of the collectibility of the receivables in light of historical experience, the nature and volume of the receivables and other subjective factors.

An allowance for doubtful accounts has been established based on management’s review of the collectability of the receivables in light of historical experience, the nature and volume of the receivables and other subjective factors.

Accounts receivable are charged against the allowance, upon approval by management, when they are deemed uncollectible.

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

These assets and liabilities are subject to fair value adjustments

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

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

SandRidge Energy, Inc.

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Notes to Consolidated Financial Statements

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

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

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

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

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

The Company capitalized gross internal costs of $ 0.5 million, $ 0.7 million and $ 5.7 million during the years ended December 31, 2021, 2020 and 2019, respectively.

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

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

Derivative contracts that qualify and are designated as cash flow hedges

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

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

SandRidge Energy, Inc.

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Notes to Consolidated Financial Statements

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

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

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Property, Plant and Equipment, Net.

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

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

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

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Debt Issuance Costs.

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

The Company includes unamortized debt issuance costs, if any, related to its 2020 Credit Facility in other assets in the consolidated balance sheets.

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

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

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

Liabilities are recorded for imbalances greater than the Company’s proportionate share of remaining estimated natural gas reserves.

The Company has recorded a liability for natural gas imbalance positions of $ 1.4 million and $ 1.1 million at

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

Liabilities are recorded for imbalances greater than the Company’s proportionate share of remaining estimated natural gas reserves.

The Company has recorded a liability for natural gas imbalance positions of $ 1.1 million and $ 1.6 million at December 31, 2020 and 2019, respectively.

December 31, 2021 and 2020, respectively.

The Company includes the gas imbalance positions in other long-term obligations in the consolidated balance sheets.

Allocation of Share-Based Compensation.

Equity compensation provided to employees directly involved in exploration and development activities is capitalized to the Company’s oil and natural gas properties.

Equity compensation provided to employees directly involved in production and development activities is capitalized to the Company’s oil and natural gas properties.

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

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

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

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

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

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

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

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

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

The Company’s loss was further limited as any amounts due from a defaulting counterparty that was a lender under the 2017 Credit Facility could have been offset against any amounts owed to the same counterparty under the 2017 Credit Facility.

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

As the operator of a property, the Company makes full payment for costs associated with the property and seeks reimbursement from the other working interest

SandRidge Energy, Inc.

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Notes to Consolidated Financial Statements

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

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

As the operator of a property, the Company makes full payment for costs associated with the property and seeks reimbursement from the other working interest owners in the property for their share of those costs.

owners in the property for their share of those costs.

The Company’s joint interest partners are primarily independent oil and natural gas producers.

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Purchasers of the Company’s oil, natural gas and NGL production consist primarily of independent marketers, large oil and natural gas companies and gas pipeline companies.

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

The number of available purchasers and markets in the areas where we sell our production reduces the risk that the loss of a single downstream customer would materially affect our sales.

We do not have any material commitments to deliver fixed and determinable quantities of oil and natural gas in the future under existing sales contracts or sales agreements.

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

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December 31, 2021

Targa Pipeline Mid-Continent West OK LLC $ 91,066 53.9 %

Plains Marketing, L.P.

$ 51,204 30.3 %

December 31, 2020

Plains Marketing, L.P.

$ 40,058 34.8 %

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

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however, the impact was not material upon adoption.

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 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 ASU is effective for the Company beginning January 1, 2021 and resulted in no material impact on its consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted.

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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 United States Generally Accepted Accounting Principles ("US GAAP") provisions to contracts, hedging relationships, and other transactions that reference LIBOR, or other reference rates expected to be discontinued because of reference rate reform, if certain criteria are met.

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

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

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

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

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.

The Company is currently reviewing the potential impact of the upcoming LIBOR

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

reference rate change on its current contracts and hedging relationships and will determine the applicable provisions of ASU 2020-04.

Supplemental Cash Flow Information

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Year Ended December 31,

2021 2020 2019

Supplemental Disclosure of Cash Flow Information

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2021 Acquisitions and Divestitures

On April 22, 2021, we announced the acquisition of all 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.

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.

The Company recorded a decrease to the sales price of $ 0.8 million as a result of post-closing adjustments made during the second half of the year.

As a result, (Gain) loss on sale of assets decreased to $ 18.9 million for the year ended December 31, 2021.

2020 Acquisitions and Divestitures

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

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Nonmonetary transaction.

During the third quarter of 2019, the Company transferred its interest in certain proved oil and natural gas properties located in Comanche, Harper and Sumner counties in Kansas along with associated electrical infrastructure and an insignificant amount of accounts receivable with an aggregate estimated fair value of $ 5.4 million, for an interest in certain other proved oil and natural gas properties located in Comanche, Harper and Barber counties in Kansas.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

infrastructure and an insignificant amount of accounts receivable with an aggregate estimated fair value of $ 5.4 million, for an interest in certain other proved oil and natural gas properties located in Comanche, Harper and Barber counties in Kansas.

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

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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 consolidated balance sheets approximated fair value at December 31, 2020 and December 31, 2019.

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

Additionally, the carrying amount of debt associated with borrowings outstanding under the 2020 Credit Facility approximated fair value as borrowings bear interest at variable rates.

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

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Fair Value - Recurring Measurement Basis

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

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

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

December 31, 2021

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Commodity derivative contracts $ — $ 200 $ — $ 179 $ 21

$ — $ 114 $ — $ — $ 114

Total $ — $ 200 $ — $ 179 $ 21

____________________

(1) Represents the impact of netting assets and liabilities with counterparties where the right of offset exists.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

During the years ended December 31, 2021, 2020 and 2019, the Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements.

9 unchanged sentences

Total accounts receivable, net $ 21,505 $ 19,576

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table presents the balance and activity in the allowance for doubtful accounts for the years ended December 31, 2021 and 2020 (in thousands):

6 unchanged sentences

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

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

The assessment was almost entirely reversed in the amount of $ 2.4 million during the second half of 2021.

(2) Deductions represent collections of amounts for which an allowance had previously been established.

Commodity Derivatives

5 unchanged sentences

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.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table summarizes derivative activity for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Year Ended December 31,

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

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

2021 2020 2019

Loss (gain) on commodity derivative contracts $ 2,251 $ ( 5,765 ) $ ( 1,094 )

Cash paid (received) on settlements $ 2,230 $ ( 5,879 ) $ ( 6,266 )

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 by commodity type in the consolidated balance sheets.

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

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

As of December 31, 2021, the counterparties to the Company’s open commodity derivative contracts consisted of one financial institution.

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 as of December 31, 2021 and no open positions as of December 31, 2020 (in thousands):

December 31, 2021

1 unchanged sentence

Derivative contracts - current $ 200 $ 179 $ 21 $ — $ 21

$ 114 $ — $ 114 $ — $ 114

Total $ 200 $ 179 $ 21 $ — $ 21

As of December 31, 2021, the Company's open derivative contracts consisted of natural gas and NGL 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 Units Weighted Average Fixed Price per Unit

NGL Price Swaps:

January 2022 - February 2022 1,042,000 Gallons $ 1.20

Natural Gas Price Swaps:

January 2022 - February 2022 720,000 MMBtu $ 4.07

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

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

end of the period.

Fair Value of Derivatives

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

The following table presents the fair value of the Company’s derivative contracts on a net basis with same counterparty netting (in thousands):

Type of Contract Balance Sheet Classification 2021

Derivative assets

Oil price swaps Derivative contracts - current $ 114

Natural gas price swaps Derivative contracts - current $ —

Total net derivative contracts $ 114

Derivative liabilities

Natural Gas and NGL price swaps Derivative - Current liabilities $ 21

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

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

The Company elected the 'package of practical expedients,' and therefore did not have to reassess prior conclusions about lease identification, lease classification and initial indirect costs.

The Company also elected the land easement practical expedient and short-term lease recognition exemption, under which leases with initial terms less than 12 months are not required to be presented on the balance sheet.

The Company further elected the practical expedient to combine lease and non-lease components for asset classes including drilling rigs, compressors and various office equipment.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company determines if an arrangement is or contains a lease at inception.

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

Lease liabilities were recognized based on the present value of the lease payments not yet paid over the lease term at January 1, 2019 for existing leases and at the commencement date for any new leases entered into subsequent to January 1, 2019.

As most of the Company's leases do not provide an implicit rate, the Company's incremental borrowing rate was used as the discount rate when determining the present value of future payments.

2 unchanged sentences

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

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

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

The Company had operating and financing leases for vehicles and equipment outstanding during the year ended December 31, 2021 and 2020, which were not significant to the consolidated financial statements.

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

Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019

Short-term lease cost (1) $ 892 $ 1,880 $ 9,994

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___________________

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

(1) There were no short-term lease costs capitalized as part of oil and natural gas properties during the year ended December 31, 2021 and 2020, and $ 4.8 million in 2019.

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Property, Plant and Equipment

6 unchanged sentences

Net oil and natural gas properties capitalized costs 93,054 106,222

Land 200 4,400

Electrical infrastructure 121,819 121,819

6 unchanged sentences

Total property, plant and equipment, net $ 190,845 $ 209,340

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

The average rates used for depreciation and depletion of oil and natural gas properties were $ 0.78 per Boe in 2021, $ 5.11 per Boe in 2020 and $ 12.28 per Boe in 2019.

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

2 unchanged sentences

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

For leases that are held by production, the Company estimates that any associated unproved costs will be evaluated and transferred to the amortization base of the full cost pool within a 10 -year period from the original lease date.

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Impairment for the years ended December 31, 2021, 2020 and 2019 consists of the following (in thousands):

Year Ended December 31,

2021 2020 2019

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

1 unchanged sentence

$ — $ 256,399 $ 409,574

During the year ended December 31, 2021, the Company did not record a full cost limitation impairment charge.

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

1 unchanged sentence

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

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

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

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

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

Prior Credit Facility — 57,500

Total debt 20,000 57,500

current maturities of long-term debt — —

2020 Credit Facility - Term Loan $ — $ 20,000

Long-term debt $ — $ 20,000

Credit Facility.

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

The New Credit Facility matures on November 30, 2023.

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

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

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

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

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

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

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

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

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

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

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

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

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

The 2020 Credit Facility consisted of a $ 10.0 million revolving loan facility and a $ 20 million term loan facility.

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

The Company used the $ 20.0 million term loan proceeds to repay the $ 12.0 million outstanding on the 2017 Credit Facility on November 30, 2020.

On September 2, 2021, the Company repaid its $ 20.0 million, term loan in full and terminated all commitments and obligations under the 2020 Credit Facility.

The Company’s payment to the Lender under the Credit Agreement satisfied all of the Company’s remaining term debt and revolving debt obligations.

The Company did not incur any early termination penalties as a result of the repayment of indebtedness or termination of the Credit Agreement.

The 2020 Credit Facility would have matured on November 30, 2023.

At December 31, 2021, the Company did no t have any term or revolving debt obligations and as of December 31, 2020, the Company had a $ 20.0 million term loan outstanding under the 2020 Credit Facility.

During the year ended December 31, 2021, the weighted average interest rate paid for borrowings outstanding under the 2020 Credit Facility was approximately 2.6 %.

During the year ended December 31, 2020, the weighted average interest rate paid for borrowings outstanding under both the outstanding 2017 Credit Facility and the 2020 Credit Facility was approximately 3.2 %.

As a result of the termination of the 2020 Credit Facility, the company does not have any covenants to maintain.

During the year ended December 31, 2021, the Company paid a related party, an affiliate of Icahn Enterprises, $ 0.4 million of interest expense which is included on the Interest expense, net line item on the Consolidated Statement of Operations.

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

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

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

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

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

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

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

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

Asset Retirement Obligations

1 unchanged sentence

Year Ended December 31,

2021 2020 2019

Beginning balance $ 57,168 $ 75,016 $ 60,064

8 unchanged sentences

(1) Revisions for the years ended December 31, 2021, 2020 and 2019 relate primarily to changes in estimated well lives due to changes in oil and natural gas prices and changes in plugging cost estimates.

(2) $ 6.1 million is related to the sale of NPB in February 2021.

(3) Included on the Depreciation and depletion - oil and natural gas line item on the Consolidated Statement of Operations.

Commitments and Contingencies

Included below is a discussion of the Company's various future commitments and contingencies as of December 31, 2021.

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.

The commitments and contingencies under these arrangements are not recorded in the accompanying consolidated balance sheets.

At December 31, 2021 the Company's only material commitment in each of the next five years and beyond is its asset retirement obligations.

for additional discussions.

See Note 12 for additional discussions.

Legal Proceedings.

4 unchanged sentences

Securities Litigation , Case No.

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

5:12-cv-01341-LRW, USDC, Western District of Oklahoma (“In re SandRidge Energy, Inc.

Securities Litigation”);

• 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

5:15-cv-00634-SLP, USDC, Western District of Oklahoma (“Lanier Trust”)

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

1 unchanged sentence

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

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

The motion for class certification in Lanier Trust remains pending.

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

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

Securities Litigation.

The motions remain pending.

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

10 unchanged sentences

Year Ended December 31,

2021 2020 2019

Federal $ — $ ( 646 ) $ —

Federal — — —

Total (benefit) provision $ — $ ( 646 ) $ —

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Year Ended December 31,

2021 2020 2019

Computed at federal statutory rate $ 24,404 $ ( 58,574 ) $ ( 94,354 )

5 unchanged sentences

Change in valuation allowance ( 26,733 ) 69,285 120,211

Other ( 4 ) 471 —

Total (benefit) provision $ — $ ( 646 ) $ —

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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

As a result of the significant weight placed on the Company’s cumulative negative earnings position, the Company continued to maintain the full valuation allowance against its remaining net deferred tax asset at December 31, 2019 and December 31, 2020.

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

9 unchanged sentences

Asset retirement obligations 14,842 15,216

Investments (1) 106 —

Other 2,363 2,500

4 unchanged sentences

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

12 unchanged sentences

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

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

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

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

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

In July 2020, the U.S.

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

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

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

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Common Stock and Performance Share Units.

At December 31, 2021, the Company had 36.7 million shares of common stock, par value $ 0.001 per share, issued and outstanding, including 0.1 million shares of unvested restricted stock awards, and 250.0 million shares of common stock authorized.

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

The Company also has 0.4 million of restricted stock units, an immaterial amount of performance share units and 0.3 million stock options outstanding at December 31, 2021 as discussed further in Note 17.

Since the fourth quarter of 2016, the Company has issued approximately 4.9 million Series A warrants and 2.1 million Series B warrants to certain holders of general unsecured claims as defined in the 2016 bankruptcy reorganization plan.

1 unchanged sentence

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Share Repurchase Program.

In August 2021, our Board of Directors approved the initiation of a share repurchase program (the "Program") authorizing us to purchase up to an aggregate of $ 25.0 million of our 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 our 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.

We did not repurchase any common stock under the Program during the year ended December 31, 2021.

The Tax Benefits Preservation Plan .

2 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.

6 unchanged sentences

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

5 unchanged sentences

The Rights are not exercisable until the Distribution Time.

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

The Tax Benefits Preservation Plan was approved at the 2021 annual meeting of stockholders on May 25, 2021.

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.

7 unchanged sentences

Year Ended December 31,

2021 2020 2019

Number of shares withheld for taxes 192 51 56

1 unchanged sentence

The following table disaggregates the Company’s revenue by source for the years ended December 31, 2021, 2020 and 2019 (in thousands):

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Year Ended December 31,

Oil $ 73,621 $ 186,360

2021 2020 2019

$ 62,297 $ 73,621 $ 186,360

NGL 50,836 17,962 35,598

2 unchanged sentences

Total revenues $ 168,882 $ 114,976 $ 266,845

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(1) Results include revenue from NPB from 2019 through February 5, 2021, the closing date of the NPB sale.

Oil, natural gas and NGL revenues.

10 unchanged sentences

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

As of December 31, 2020 and 2019 the Company had revenues receivable of $ 12.8 million and $ 22.3 million, respectively, and did not record any bad debt expense on revenues receivable during the year ended December 31, 2020.

As of December 31, 2021 and 2020, the Company had revenues receivable of $ 18.8 million and $ 12.8 million., respectively, and we did no t record any bad debt expense on revenues receivable December 31, 2021 and 2020.

Share-Based Compensation

25 unchanged sentences

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

Granted 56 $ 5.26

Vested (1) ( 111 ) $ 2.99

Forfeited / Canceled ( 2 ) $ 16.25

Unvested restricted shares outstanding at December 31, 2021 57 $ 5.26

____________________

3 unchanged sentences

Outstanding restricted stock units at December 31, 2021 will generally vest over a three-year period with a remaining weighted average contractual period of 2.19 years and have $ 1.4 million associated unrecognized compensation cost at year in December 31, 2021.

Compensation expense was $ 0.3 million.

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

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

Units Weighted-

4 unchanged sentences

Granted 178 $ 7.58

Vested (1) ( 477 ) $ 1.14

Forfeited / Canceled ( 705 ) $ 0.94

Unvested restricted stock units outstanding at December 31, 2021 406 $ 4.18

____________________

(1) The aggregate intrinsic value of restricted stock units that vested during 2021 was approximately $ 2.4 million based on the stock price at the time of vesting.

Performance Share Units.

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

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

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

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

Compensation expense was immaterial.

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

Outstanding performance share units at December 31, 2021 will generally vest over a three year period with a remaining weighted average contractual period of 0.15 years and an immaterial amount of unrecognized compensation cost at year in December 31, 2021.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

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Vested ( 19 ) $ 15.11

Forfeited / Canceled —

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

1 unchanged sentence

Vested ( 92 ) $ 20.41

Forfeited / Canceled —

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Granted 39 $ 5.01

Vested (1) ( 197 ) $ 1.70

Forfeited / Canceled ( 13 ) $ 2.38

Unvested performance share units outstanding at December 31, 2021 34 $ 5.01

____________________

(1) The aggregate intrinsic value of performance share units that vested during 2021 was approximately $ 0.8 million.

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Expected volatility 78.2 %

Expected term 2.75

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

Expected term 5 years

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table presents a summary of the Company's stock option activity for the year ended December 31, 2021 and 2020:

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

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

Outstanding at December 31, 2020 91 $ — 2.68 $ 0.24

Granted 250 — — —

Exercised ( 9 ) $ 6.43 — —

Expired ( 1 ) — — —

Forfeited / Canceled ( 7 ) — — —

Outstanding at December 31, 2021 (1) 324 $ — 7.80 $ 0.80

Exercisable at December 31, 2021 24 $ — 1.59 $ 0.19

____________________

(1) All outstanding stock options as of December 31, 2021 are expected to vest.

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

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

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

In August 2021 and February 2020, the Company granted nonqualified stock options.

As of December 31, 2021, the total unrecognized compensation expense was $ 1.4 million and will be recognized over a weighted average period of 4.60 years.

SandRidge Energy, Inc.

19 unchanged sentences

Share and incentive-based compensation expense, net $ 1,188 $ 1,784 $ 40 $ — $ 3,012

Year Ended December 31, 2019

Equity-classified awards:

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

Performance share units 282 281 — — 563

Stock options 661 12 — — 673

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

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

Share and incentive-based compensation expense, net $ 3,265 $ 490 $ 500 $ — $ 4,255

____________________

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The Annual Incentive Plan ("AIP") incorporates quantitative performance measures, strategic qualitative goals and competitive target award levels for management and employees for the 2021 and 2020 performance years.

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

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

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

Incentive bonus awards for 2021 will be provided based on performance measures related to health, safety and environment, production, operating expenses, among other metrics and will be paid in 2022 at the discretion of the Board of Directors.

As of December 31, 2021 and 2020, the Company accrued approximately $ 2.1 million and $ 2.6 million, respectively for AIP.

AIP Payments totaling $ 2.1 million were paid in 2021 for the 2020 performance year and $ 1.1 million were paid in 2020 for the 2019 performance year.

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

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

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

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

Participants in the plan are immediately 100 % vested in the discretionary employee contributions and related earnings on those contributions.

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

For the years ended December 31, 2021, 2021, 2020 and 2019, the Company made matching contributions to the plan equal to 100 % on the first 10 % of employee

SandRidge Energy, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

deferred wages, excluding incentive compensation, totaling $ 0.8 million, $ 1.1 million and $ 2.2 million, respectively.

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

Participants in the plan are immediately 100 % vested in the discretionary employee contributions and related earnings on those contributions.

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

Employee Termination Benefits

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$ 6,609 $ 1,824 163 $ 8,433

Year Ended December 31, 2019

Executive Employee Termination Benefits (2) $ 1,194 $ 490 37 $ 1,684

Other Employee Termination Benefits (3) 2,608 500 44 3,108

$ 3,802 $ 990 81 $ 4,792

____________________

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

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

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

(4) 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 year end December 31, 2021 and performance share units upon the departure of certain executives and the reductions in workforce in 2020 and 2019 reflects the remaining unrecognized compensation expense associated with these awards at the date of termination was recorded as employee termination benefits.

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

5 unchanged sentences

Notes to Consolidated Financial Statements

Loss per Share

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

Net Loss Weighted Average Shares Loss Per Share

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:

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

(In thousands, except per share amounts)

Year Ended December 31, 2021

Basic earnings per share $ 116,738 36,393 $ 3.21

Effect of dilutive securities

Restricted stock awards (1) — 58

Restricted share units (1) — 689

Performance share units (1) — 83

Stock Options (1) — 48

Diluted earnings per share $ 116,738 37,271 $ 3.13

Year Ended December 31, 2020

Basic loss per share $ ( 277,353 ) 35,689 $ ( 7.77 )

1 unchanged sentence

Restricted stock awards (2) — —

Restricted share units (2) — —

Performance share units (2) — —

Stock Options (2) — —

Warrants (2) — —

4 unchanged sentences

Restricted stock awards (2) — —

Restricted share units (2) — —

Performance share units (2) — —

Stock Options (2) — —

Warrants (2) — —

1 unchanged sentence

____________________

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

(1) The incremental shares of potentially dilutive restricted stock awards, restricted stock units, performance share units and stock options were included for the year ended December 31, 2021 as their effect was dilutive under the treasury stock method.

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

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

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and a summary of the changes in the standardized measure of discounted future net cash flows associated with proved oil, natural gas and NGL reserves.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Capitalized Costs Related to Oil and Natural Gas Producing Activities

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

2021 2020 2019

Oil and natural gas properties

4 unchanged sentences

Net oil and natural gas properties capitalized costs $ 93,054 $ 106,222 $ 379,340

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

1 unchanged sentence

Year Ended December 31,

2021 2020 2019

Acquisitions of properties

4 unchanged sentences

Total cost incurred $ 14,495 $ 8,269 $ 161,553

____________________

(1) Includes land, geological, geophysical and leasehold costs.

Results of Operations for Oil and Natural Gas Producing Activities

1 unchanged sentence

Year Ended December 31,

2021 2020 2019

Revenues $ 168,882 $ 114,450 $ 266,104

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Total expenses 55,681 322,222 667,159

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

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

Income (loss) before income taxes 113,201 ( 207,772 ) ( 401,055 )

Income tax expense (benefit) (1) 26,734 ( 51,750 ) ( 105,477 )

Results of operations for oil and natural gas producing activities (excluding corporate overhead and interest costs) $ 86,467 $ ( 156,022 ) $ ( 295,578 )

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Oil, Natural Gas and NGL Reserve Quantities

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

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Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively large major expenditure is required for recompletion.

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

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

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

Over 96 % of the Company’s proved reserves estimates have been prepared by independent reservoir engineers and geoscience professionals and the remaining 4 % of proved reserves are estimated internally are reviewed by members of the Company’s senior management to ensure that the Company consistently applies rigorous professional standards and the reserve definitions prescribed by the SEC.

Cawley, Gillespie & Associates, independent oil and natural gas consultants, prepared the estimates of proved reserves of oil, natural gas and NGLs for over 96 % of the Company’s net interest in oil and natural gas properties as of the end 2021 and Cawley, Gillespie & Associates and Ryder Scott together prepared over 90 % as of the end of 2020 and 2019.

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

The remaining proved reserves were based on Company estimates.

The Company believes the geoscience and engineering data examined provides reasonable assurance that the proved reserves are economically producible in future years from known reservoirs, and under existing economic conditions, operating methods and governmental regulations.

The Company believes the geoscience and engineering data examined provides reasonable assurance that the proved reserves are economically producible in future years from known reservoirs, and under recent, past or historical economic conditions, operating methods and governmental regulations.

Estimates of proved reserves are subject to change, either positively or negatively, as additional information is available and contractual and economic conditions change.

2021 Activity .

Proved reserves increased from 36.9 MMBoe at December 31, 2020 to 71.3 MMBoe at December 31, 2021, primarily as a result of positive revisions of 27.3 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, 13.6 MMBoe associated with reduction in expenses and other commercial improvements, 3.7 MMBoe related to a well reactivation program, and purchases of 1.4 MMBoe of proved reserves.

The Company also recorded 2021 production totaling 6.8 MMBoe and a decrease of 3.6 MMBoe due to sales and 1.2 MMBoe attributable to well shut-ins, and other revisions.

2020 Activity .

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

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

The Company also recorded 2020 production totaling 8.7 MMBoe and a decrease of 9.0 MMBoe attributable to well

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

shut-ins, sales and other revisions.

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

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The summary below presents changes in the Company’s estimated reserves.

NPB is included in 2021, 2020 and 2019.

Oil NGL Natural Gas Total

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

Acquisitions of new reserves — — — —

Extensions and discoveries 635 94 2,127 1,084

4 unchanged sentences

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

Extensions and discoveries — — — —

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

1 unchanged sentence

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

Revisions of previous estimates (2) 3,627 14,924 148,736 43,340

Acquisitions of new reserves 135 438 5,235 1,446

Extensions and discoveries — — — —

Sales of reserves in place ( 3440 ) ( 28 ) ( 716 ) ( 3,587 )

Production ( 957 ) ( 2,266 ) ( 21,417 ) ( 6,793 )

As of December 31, 2021 7,850 24,313 234,731 71,285

Proved developed reserves

1 unchanged sentence

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

As of December 31, 2021 7,850 24,313 234,731 71,285

Proved undeveloped reserves

1 unchanged sentence

As of December 31, 2020 — — — —

As of December 31, 2021 — — — —

_________________

(1) Natural gas reserves are computed at 14.65 pounds per square inch absolute and 60 degrees Fahrenheit.

(2) Revisions include changes due to previous quantity estimates, pricing, and productions costs.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Standardized Measure of Discounted Future Net Cash Flows (Unaudited)

5 unchanged sentences

At December 31,

2021 2020 2019

Oil (per Bbl) $ 64.95 $ 36.54 $ 50.63

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Natural gas (per Mcf) $ 2.56 $ 0.87 $ 1.16

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

• future development and production costs are determined based on trailing 12 month average cost at year-end;

• the standardized measure includes projections of future abandonment costs based upon actual costs at year-end;

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

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

2021 2020 2019

Future cash inflows from production $ 1,579,734 $ 471,038 $ 2,254,530

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(2) The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax deductions and tax credits under current laws, including expected tax benefits to be realized from the utilization of net operating loss carryforwards.

(3) NPB is included in 2020 and 2019.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table represents the Company’s estimate of changes in the standardized measure of discounted future net cash flows from proved reserves (in thousands):

Year Ended December 31,

2021 2020 2019

Beginning present value $ 104,986 $ 364,290 $ 1,045,603

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____________________

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

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

(1) The change in estimated future development costs and revisions of previous quantity estimates primarily reflect increases from the well reactivation program and extended reserve life due to increase in pricing.

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

(3) Standardized Measure was determined using SEC prices, and does not reflect actual prices received or current market prices.

SandRidge Energy, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

(4) NPB is included in 2020 and 2019.

Subsequent Events

On March 3, 2021, the Company named Mr.

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

The Company also named Mr.

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

It also named Mr.

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

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

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

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

As of the filing date of this report, the Company does not have any open derivative contracts.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data