What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-10 · 74 added, 244 removed, 320 unchanged (50% of the section changed)

4 unchanged sentences

(In thousands)

September 30,

2022 December 31, 2021

21 unchanged sentences

Total current liabilities 65,308 64,033

Long-term debt — 20,000

Asset retirement obligation 42,554 41,762

5 unchanged sentences

250,000 shares authorized;

36,674 issued and outstanding at September 30, 2021 and 35,928 issued and outstanding at December 31, 2020

36,726 issued and outstanding at March 31, 2022 and 36,675 issued and outstanding at December 31, 2021

Warrants 88,520 88,520

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)

(In thousands, except per share data)

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

2021 2020 2021 2020

Three Months Ended March 31,

Oil, natural gas and NGL $ 57,487 $ 33,623

Other — 129 — 526

Total revenues 57,487 33,623

3 unchanged sentences

Depreciation and amortization — other 1,575 1,494

Impairment — 44,043 — 253,797

General and administrative 2,530 2,090

5 unchanged sentences

Total expenses 22,687 ( 1,439 )

Income (loss) from operations 26,459 ( 48,051 ) 77,570 ( 276,196 )

Income from operations 34,800 35,062

Other income (expense)

2 unchanged sentences

Total other income (expense) ( 76 ) ( 19 )

Income (loss) before income taxes 28,599 ( 48,749 ) 79,894 ( 277,844 )

Income before income taxes 34,724 35,043

Income tax expense (benefit) — —

Net income (loss) $ 28,599 $ ( 48,749 ) $ 79,894 $ ( 277,198 )

Net income (loss) per share

Net income $ 34,724 $ 35,043

Net income per share

Basic $ 0.95 $ 0.97

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Shares Amount

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Balance at December 31, 2021

2 unchanged sentences

Stock-based compensation — — — — 384 — 384

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

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

Cash paid for tax obligations on vested stock awards — — — — ( 235 ) — ( 235 )

1 unchanged sentence

Balance at March 31, 2022 36,726 $ 37 6,981 $ 88,520 $ 1,062,886 $ ( 871,248 ) $ 280,195

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

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

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

— — — — 16,252 16,252

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

Stock-based compensation — — — — 236 — 236

Issuance of stock awards, net of cancellations 114 — — — — — —

Cash paid for tax obligations on vested stock awards — — — — ( 286 ) — ( 286 )

— — — — — 28,599 28,599

Balance at September 30, 2021

36,674 $ 37 6,981 $ 88,520 $ 1,062,376 $ ( 942,816 ) $ 208,117

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

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

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

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

Stock-based compensation — — — — 236 — 236

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

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

2 unchanged sentences

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

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

Stock-based compensation — — — — 583 — 583

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

— — — — — ( 215,779 ) ( 215,779 )

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

Issuance of stock awards, net of cancellations 41 — — — — — —

Stock-based compensation — — — — 2,004 — 2,004

Cash paid for tax obligations on vested stock awards — — — — ( 62 ) — ( 62 )

— — — — — ( 48,749 ) ( 48,749 )

Balance at September 30, 2020 35,906 36 6,706 88,520 $ 1,061,961 $ ( 1,022,555 ) $ 127,962

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

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ 79,894 $ ( 277,198 )

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

Net income $ 34,724 $ 35,043

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

Provision for doubtful accounts — 21

Depreciation, depletion, and amortization 3,975 3,999

Impairment — 253,797

Debt issuance costs amortization — 16

Write off of debt issuance costs 174 —

(Gain) loss on derivative contracts 1,064 —

Cash received on settlement of derivative contracts — 11,197

Cash (paid) received on settlement of derivative contracts ( 1,085 ) —

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

Stock-based compensation 356 235

Other 107 114

Changes in operating assets and liabilities ( 6,879 ) ( 5,305 )

2 unchanged sentences

Capital expenditures for property, plant and equipment ( 5,629 ) ( 3,094 )

Acquisition of assets ( 3,545 ) ( 3,276 )

Purchase of other property and equipment ( 49 ) ( 59 )

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings — 39,000

Repayments of borrowings ( 20,000 ) ( 84,500 )

Reduction of financing lease liability ( 113 ) ( 74 )

8 unchanged sentences

Cash paid for interest, net of amounts capitalized $ ( 145 ) $ ( 92 )

Cash received for income taxes $ — $ 616

Supplemental Disclosure of Noncash Investing and Financing Activities

Purchase of PP&E in accounts payable $ 2,169 $ 683

Purchase of Plant Property and Equipment in accounts payable $ 680 $ 1,342

Right-of-use assets obtained in exchange for financing lease obligations $ — $ 363

Carrying value of properties exchanged $ — $ 3,890

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

14 unchanged sentences

Significant Accounting Policies.

The unaudited condensed consolidated financial statements were prepared in accordance with the accounting policies stated in the 2020 Form 10-K, as well as the items noted below.

The unaudited condensed consolidated financial statements were prepared in accordance with the accounting policies stated in the Company’s 2021 Form 10-K, as well as the items noted below.

Use of Estimates.

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

Going Concern Consideration.

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

Recently Adopted Accounting Pronouncements ASU 2019-12.

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

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

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

however, the impact was not material upon adoption.

Recent Accounting Pronouncements Not Yet Adopted ASU 2020-04 .

Recent Accounting Pronouncements Adopted ASU 2020-04 .

In March 2020, FASB issued ASU No.

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

This ASU provides optional practical expedients and exceptions for applying GAAP provisions to contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR"), or other reference rates expected to be discontinued because of reference rate reform, if certain criteria are met.

This ASU provides optional practical expedients and exceptions for applying GAAP provisions to contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR"), or other reference rates expected to be discontinued because of reference rate reform, if certain criteria are met.

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

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

The Company believes the impact upon adoptions will not have a material impact on the financial statements.

The Company concluded the ASU did not have a material impact on the consolidated financial statements.

SANDRIDGE ENERGY, INC.

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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 unaudited condensed consolidated balance sheets approximated fair value at September 30, 2021 and December 31, 2020.

Additionally, the carrying amount of debt associated with borrowings outstanding under the credit facility dated November 30, 2020 ("New Credit Facility") approximates fair value as borrowings bear interest at variable rates.

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

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

5 unchanged sentences

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

The Company had liabilities classified in Level 2 of the hierarchy as of September 30, 2021 and none as of December 31, 2020 as described below.

The Company had liabilities classified in Level 2 of the hierarchy as of December 31, 2021 and none as of March 31, 2022 as described below.

Level 2 Fair Value Measurements

5 unchanged sentences

Fair Value - Recurring Measurement Basis

The Company had liabilities classified in Level 2 of the hierarchy as of September 30, 2021 and no open commodity derivative contracts as of December 31, 2020.

There were no open commodity derivative contracts as of March 31, 2022.

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

September 30, 2021

December 31, 2021

Fair Value Measurements

4 unchanged sentences

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

The Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements during the three-month periods ended March 31, 2022 and 2021.

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements during the three and nine-month periods ended September 30, 2021 and 2020.

Commodity Derivatives

1 unchanged sentence

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

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

There were no open commodity derivative contracts as of March 31, 2022.

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

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

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

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

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

2021 2020 2021 2020

The following table summarizes derivative activity for the three-month periods ended March 31, 2022, and 2021 (in thousands):

Three Months Ended March 31,

(Gain) loss on commodity derivative contracts $ 1,064 $ —

Cash (paid) received on settlements $ ( 1,085 ) $ —

Master Netting Agreements and the Right of Offset.

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 in the unaudited condensed consolidated balance sheets.

M aster Netting Agreements and the Right of Offset.

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

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

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 September 30, 2021 and no open positions as of December 31, 2020 (in thousands):

September 30, 2021

There were no open commodity derivatives contracts as of March 31, 2022.

As of December 31, 2021, the Company’s open commodity derivative contracts were held with one counterparty.

There were no open derivative positions as of March 31, 2022.

Gross Amounts

5 unchanged sentences

$ 200 $ 179 $ 21 $ — $ 21

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

As of September 30, 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:

October 2021 - February 2022 2,605,000 Gallons $ 1.20

Natural Gas Price Swaps:

October 2021 - February 2022 1,800,000 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.

1 unchanged sentence

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Fair Value of Derivatives

The following table presents the fair value of the Company’s derivative contracts as of September 30, 2021 on a gross basis without regard to same counterparty netting (in thousands):

Type of Contract Balance Sheet Classification September 30, 2021

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

Type of Contract Balance Sheet Classification December 31, 2021

Derivative liabilities

NGL price swaps Derivative Contracts - Current $ 819

Natural gas price swaps Derivative Contracts - Current 3,310

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

Total net derivative contracts $ 21

2 unchanged sentences

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

September 30,

2022 December 31, 2021

16 unchanged sentences

$ 193,706 $ 190,845

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

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

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

The SEC Prices utilized in the calculation of proved reserves included in the full cost ceiling test at September 30, 2021 were $ 57.69 per barrel of oil and $ 2.94 per Mcf of natural gas, before price differential adjustments.

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

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

The Company recorded a total impairment charge of $ 253.8 million for the nine-month period ended September 30, 2020, which included a full cost ceiling limitation impairment charge of $ 215.8 million, and an impairment charge of $ 38.0 million to write down the value of the Company's office headquarters.

The June 30, 2020, asset impairment charge of $ 38.0 million resulted from the write down of the net carrying amount of the office headquarters building assets to their estimated fair value less estimated costs to sell the building.

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

The building sale closed on August 31, 2020.

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

Acquisitions and Divestitures

Overriding Royalty Interest Assets

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

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

On September 10, 2020, the Company acquired all of the overriding royalty interest assets of SandRidge Mississippian Trust II.

The gross purchase price was $ 5.3 million (net $ 3.3 million, given our 37.6 % 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” or “North Park”), in Colorado, for a purchase price of $ 47 million.

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

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

2 unchanged sentences

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

The Company recorded a decrease to the sales price of $ 0.8 million as a result of post-closing adjustments made during the three months ended September 30, 2021.

As a result, (Gain) loss on sale of assets decreased to $ 18.9 million for the nine months ended September 30, 2021.

For the nine-months ended September 30, 2021, NPB represented $ 3.2 million, or 2.8 % of the Company's $ 114.4 million total consolidated Revenues, NPB represented $ 0.9 million, or 3.5 % of the Company's $ 26.3 million consolidated Lease

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 2021.

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

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

operating expense and NPB represented 0.1 MMBoe, or 1.3 % of the Company's consolidated total production volumes of 5.1 MMBoe.

For the three-months ended September 30, 2020, NPB represented $ 7.1 million, or 25.6 % of the Company's $ 27.7 million total consolidated Revenues, NPB represented $ 1.3 million or 16.4 % of the Company's $ 8.1 million consolidated Lease operating expense, it represented $ 0.5 million, or 19.9 % of the Company's $ 2.3 million consolidated Production, ad valorem and other taxes and NPB represented 0.2 MMBoe, or 9.9 % of the Company's consolidated total production volumes of 2.0 MMBoe.

For the nine-months ended September 30, 2020, NPB represented $ 24.5 million, or 28.9 % of the Company's $ 84.7 million total consolidated Revenues, NPB represented $ 7.1 million or 21.9 % of the Company's $ 32.4 million consolidated Lease operating expense, it represented $ 1.5 million, or 20.9 % of the Company's $ 7.4 million consolidated Production, ad valorem and other taxes and NPB represented 0.8 MMBoe, or 11.1 % of the Company's consolidated total production volumes of 6.8 MMBoe.

Accounts Payable and Accrued Expenses

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

September 30,

2022 December 31, 2021

4 unchanged sentences

Drilling advances 234 234

Accrued interest — 61

Total accounts payable and accrued expenses $ 47,292 $ 45,779

Long-Term Debt

Credit Facility.

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

As of September 30, 2021 the Company did no t have an outstanding balance and as of December 31, 2020, the Company had a $ 20.0 million term loan outstanding under the New Credit Facility.

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

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

During the three and nine-months ended September 30, 2021, the weighted average interest rate paid for borrowings outstanding under the New Credit Facility was approximately 2.60 % and 2.61 %, respectively.

During the three and nine-months ended September 30, 2021, the Company paid the Lender, a related party, $ 0.1 million and $ 0.4 million, respectively of interest expense which is included on the Interest expense, net line item on the Condensed Consolidated Statement of Operations.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Commitments and Contingencies

21 unchanged sentences

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

As a result of the significant weight placed on the Company's cumulative negative earnings position, the Company continued to maintain a full valuation allowance against its net deferred tax asset at September 30, 2021 and December 31, 2020.

As a result, the Company had no federal or state income tax expense or benefit for the three and nine-month periods ended September 30, 2021 and recorded an insignificant income tax benefit for the year ended December 21, 2020.

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

The Company has no remaining AMT credits to be refunded.

As a result, the Company had no federal or state income tax expense or benefit for the three-month periods ended March 31, 2022 and 2021.

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.

4 unchanged sentences

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

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

As of March 31, 2022, the Company had approximately $ 1.6 billion of federal NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation.

Of the $ 1.6 billion of federal NOL carryforwards, $ 0.8 billion expire during the years 2027 through 2037, while $ 0.8 billion do not have an expiration date.

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

The Company did not have unrecognized tax benefits at September 30, 2021 and December 31, 2020.

The Company did not have unrecognized tax benefits at March 31, 2022 and December 31, 2021.

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

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Common Stock, Performance Share Units, and Stock Options .

At September 30, 2021, the Company had approximately 250.0 million shares of common stock authorized, 36.7 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at September 30, 2021, the Company had approximately 0.1 million shares of unvested restricted stock awards, 0.4 million shares of unvested restricted stock units, 0.3 million stock options outstanding, and an immaterial number of unvested performance share units.

The Company has issued approximately 4.9 million Series A warrants and 2.1 million Series B warrants that are exercisable until October 4, 2022 for one share of common stock per warrant at initial prices of $ 41.34 and $ 42.03 per share, respectively, subject to adjustments pursuant to the terms of the warrants, to certain holders of general unsecured claims as defined in the Plan.

At March 31, 2022, the Company had approximately 250.0 million shares of common stock authorized, 36.7 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at March 31, 2022, the Company had approximately 0.1 million shares of unvested restricted stock awards, 0.4 million shares of unvested restricted stock units, 0.3 million stock options outstanding, and an immaterial number of unvested performance share units.

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Share Repurchase Program.

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

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

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

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

The Company did not repurchase any common stock under the Program during the third quarter ended September 30, 2021.

The Tax Benefits Preservation Plan.

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

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

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

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 NOLs and certain other tax benefits to reduce potential future U.S.

federal income tax obligations.

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

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

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

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

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

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

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

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

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

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

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

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

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

The Rights are not exercisable until the Distribution Time.

Subject to applicable rules

SANDRIDGE ENERGY, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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, each holder of a Right (other than any Acquiring Person and certain related parties, whose Rights automatically become null and void) will have the right to receive, upon exercise, shares of Common Stock having a value equal to two times the exercise price of the Right.

In the event that, at any time following the Stock Acquisition Date, any of the following occurs:

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

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

• the Company sells or otherwise transfers, in one transaction or a series of related transactions, fifty percent (50%) or more of the Company’s assets, cash flow or earning power,

• each holder of a Right (except Rights which previously have been voided as described above) will have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right.

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

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

2021 2020 2021 2020

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

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

The Company did not repurchase any common stock under the Program during the quarter ended March 31, 2022.

The following table disaggregates the Company’s revenue by source for the three-month periods ended March 31, 2022 and 2021:

Three Months Ended March 31,

(In thousands)

$ 15,198 $ 17,071 $ 45,412 $ 57,279

14,863 4,983 34,344 12,508

16,523 5,493 34,647 14,347

Oil $ 19,781 $ 15,548

NGL 17,742 8,856

Natural gas 19,964 9,219

Total revenues (1)

$ 57,487 $ 33,623

(1) March 31, 2021 includes 36 days of production for NPB, which was sold on February 5, 2021.

Oil, natural gas and NGL revenues.

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

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

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

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

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

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

The transaction price is allocated on a pro-rata basis to each unit of oil, natural gas or NGL sold based on the terms of the contract.

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Pricing for revenues receivable is estimated using current month crude oil, natural gas and NGL prices, net of deductions.

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

As of September 30, 2021, and December 31, 2020, the

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Company had revenues receivable of $ 19.0 million and $ 12.8 million, respectively, and did no t record any bad debt expense on revenues receivable during the three and nine-month periods ended September 30, 2021 and 2020.

Employee Termination Benefits

During the three-month period ended September 30, 2021, no employees received termination benefits.

Certain employees received termination benefits including cash severance and accelerated share-based compensation upon separation of service from the Company as a result of the sale of North Park assets and other employee terminations during the nine-month period ended September 30, 2021 and as a result of a reduction in workforce during the three and nine-month periods ended September 30, 2020.

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

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

Three Months Ended September 30, 2021

Executive Employee Termination Benefits $ — $ — — $ —

Other Employee Termination Benefits — — — —

$ — $ — — $ —

Three Months Ended September 30, 2020

Executive Employee Termination Benefits

$ 1,005 $ 1,784 159 $ 2,789

Other Employee Termination Benefits

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

Nine Months Ended September 30, 2021

Executive Employee Termination Benefits $ — $ — — $ —

Other Employee Termination Benefits 32 17 — 49

$ 32 $ 17 — $ 49

Nine Months Ended September 30, 2020

Executive Employee Termination Benefits $ 1,009 $ 1,784 159 $ 2,793

Other Employee Termination Benefits 5,598 40 4 5,638

$ 6,607 $ 1,824 163 $ 8,431

____________________

(1) Share-based compensation recognized in connection with the accelerated vesting of restricted stock awards due to the sale of the North Park assets for the nine-month period ended September 30, 2021 and as a result of the reduction in workforce for the three and nine-month periods ended September 30, 2020.

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

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

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

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

As of March 31, 2022, and December 31, 2021, the Company had revenues receivable of $ 23.8 million and $ 18.8 million, respectively, and did no t record any bad debt expense on revenues receivable during the three-month periods ended March 31, 2022 and 2021.

SANDRIDGE ENERGY, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Earnings (Loss) per Share

Earnings per Share

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

Earnings (Loss)

Weighted Average Shares Earnings (Loss) Per Share

Weighted Average Shares Earnings Per Share

(In thousands, except per share amounts)

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Basic earnings per share

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Stock options — 53

Diluted earnings share (2)

Diluted earnings per share (2)

$ 34,724 37,019 $ 0.94

Three Months Ended September 30, 2020

Basic loss per share $ ( 48,749 ) 35,783 $ ( 1.36 )

Effect of dilutive securities

Restricted stock awards — —

Performance share units — —

Stock options — —

Diluted loss per share (3) $ ( 48,749 ) 35,783 $ ( 1.36 )

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2021

Basic earnings per share $ 35,043 36,156 (3) $ 0.97

$ 79,894 36,318 $ 2.20

Effect of dilutive securities

5 unchanged sentences

$ 35,043 37,439 $ 0.94

Nine Months Ended September 30, 2020

Basic loss per share $ ( 277,198 ) 35,649 $ ( 7.78 )

Effect of dilutive securities

Restricted stock awards — —

Performance share units — —

Stock options — —

Diluted loss per share (3) $ ( 277,198 ) 35,649 $ ( 7.78 )

____________________

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

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

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

(2) The incremental shares of potentially dilutive restricted stock units, restricted stock awards and stock options were included for the three-month periods ended March 31, 2022 and 2021 as their effect was dilutive under the treasury stock method.

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

Tabl e of Contents

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

What changed 10-Q

Item 1. Financial Statements