What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-03 · 111 added, 165 removed, 292 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands)

September 30,

2023 December 31,

14 unchanged sentences

Other assets 311 190

Deferred tax assets 64,529 64,529

Total assets $ 628,177 $ 600,497

2 unchanged sentences

Accounts payable and accrued expenses $ 49,142 $ 46,335

Derivative contracts — 21

Asset retirement obligation 16,075 16,074

8 unchanged sentences

250,000 shares authorized;

36,865 issued and outstanding at September 30, 2022 and 36,675 issued and outstanding at December 31, 2021

Warrants 88,518 88,520

36,902 issued and outstanding at March 31, 2023 and 36,868 issued and outstanding at December 31, 2022

Additional paid-in capital 1,151,874 1,151,689

7 unchanged sentences

(In thousands, except per share data)

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

2022 2021 2022 2021

Three Months Ended March 31,

Oil, natural gas and NGL $ 43,147 $ 57,487

8 unchanged sentences

(Gain) loss on derivative contracts ( 1,447 ) 1,064

(Gain) loss on sale of assets — 761 — ( 18,952 )

Other operating income ( 94 ) ( 64 )

2 unchanged sentences

Other income (expense)

Interest expense, net ( 12 ) ( 256 ) ( 191 ) ( 387 )

Interest income (expense), net 2,499 ( 152 )

Other income, net 55 76

Total other income 135 2,140 44 2,324

Total other income (expense) 2,554 ( 76 )

Income before income taxes 23,758 34,724

15 unchanged sentences

Shares Amount

Nine Months Ended September 30, 2022

Balance at December 31, 2021

Three Months Ended March 31, 2023

Balance at January 1, 2023

36,868 $ 37 — $ — $ 1,151,689 $ ( 663,804 ) $ 487,922

Issuance of stock awards, net of cancellations 34 — — — — — —

Stock-based compensation — — — — 384 — 384

Tax withholdings paid in exchange for shares withheld on employee vested stock awards — — — — ( 211 ) — ( 211 )

— — — — — 34,724 34,724

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 16 — — — — — —

Stock-based compensation — — — — 396 — 396

— — — — — 23,758 23,758

Balance at June 30, 2022 36,742 $ 37 6,981 $ 88,520 $ 1,063,326 $ ( 822,756 ) $ 329,127

Issuance of stock awards, net of cancellations 123 — — — — — —

Stock-based compensation — — — — 384 — 384

Tax withholdings paid in exchange for shares withheld on employee vested stock awards — — — — ( 942 ) — ( 942 )

Warrants exercised — — — ( 2 ) 7 — 5

Balance at March 31, 2023

36,902 $ 37 — $ — $ 1,151,874 $ ( 640,046 ) $ 511,865

Balance at September 30, 2022

Three Months Ended March 31, 2022

Balance at January 1, 2022

36,675 $ 37 6,981 $ 88,520 $ 1,062,737 $ ( 905,972 ) $ 245,322

Nine Months Ended September 30, 2021

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

Issuance of stock awards, net of cancellations 51 — — — — — —

Stock-based compensation — — — — 384 — 384

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

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

Tax withholdings paid in exchange for shares withheld on employee 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

Tax withholdings paid in exchange for shares withheld on employee 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

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

Stock-based compensation — — — — 236 — 236

Tax withholdings paid in exchange for shares withheld on employee 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

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

1 unchanged sentence

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

Provision for doubtful accounts — ( 2,329 )

Depreciation, depletion, and amortization 5,072 3,975

Debt issuance costs amortization — 57

Write off of debt issuance costs — 174

(Gain) loss on derivative contracts ( 1,447 ) 1,064

Realized settlement losses on derivative contracts ( 867 ) —

Gain on sale of assets — ( 18,952 )

Realized settlement gains (losses) on derivative contracts 5,876 ( 1,085 )

Stock-based compensation 396 356

Other 115 107

Changes in operating assets and liabilities 6,154 ( 6,879 )

2 unchanged sentences

Capital expenditures for property, plant and equipment ( 9,392 ) ( 5,629 )

Acquisition of assets ( 1,431 ) ( 3,545 )

Purchase of other property and equipment ( 16 ) ( 49 )

Proceeds from sale of assets — 59

Net cash (used in) provided by investing activities ( 32,161 ) 25,867

Net cash used in investing activities ( 9,408 ) ( 5,619 )

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of borrowings — ( 20,000 )

Reduction of financing lease liability ( 132 ) ( 113 )

Debt issuance costs — ( 75 )

Proceeds from exercise of stock options — 28

Proceeds from exercise of warrants 5 —

Tax withholdings paid in exchange for shares withheld on employee vested stock awards ( 211 ) ( 235 )

6 unchanged sentences

Supplemental Disclosure of Noncash Investing and Financing Activities

Purchase of Plant, Property and Equipment in accounts payables and accrued expenses $ 8,153 $ 2,169

Right-of-use assets obtained in exchange for financing lease obligations $ 538 $ 960

Capital expenditures for property, plant and equipment in accounts payables and accrued expenses $ 8,904 $ 680

Inventory material transfers to oil and natural gas properties $ 75 —

Asset retirement obligation capitalized $ 12 $ —

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

10 unchanged sentences

Interim Financial Statements.

The accompanying unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes contained in the Company’s 2021 Form 10-K and 10-K/A.

Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading.

1 unchanged sentence

Significant Accounting Policies.

The unaudited condensed consolidated financial statements were prepared in accordance with the accounting policies stated in the Company’s 2021 Form 10-K and 10-K/A, 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 2022 Form 10-K, as well as the items noted below.

Use of Estimates.

15 unchanged sentences

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

The carrying values of cash, restricted cash, accounts receivable, prepaid expenses, certain other current and non-current assets, accounts payable and accrued expenses, and other current liabilities and other long-term obligations included in the unaudited condensed consolidated balance sheets approximated fair value at September 30, 2022 and December 31, 2021.

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

8 unchanged sentences

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

The Company had assets and liabilities classified in Level 2 of the hierarchy as of September 30, 2022 and December 31, 2021, respectively, as described below.

The Company had assets classified in Level 2 of the hierarchy as of December 31, 2022 and none as of March 31, 2023.

Level 2 Fair Value Measurements

5 unchanged sentences

Fair Value - Recurring Measurement Basis

As of September 30, 2022 and December 31, 2021 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):

September 30, 2022

Fair Value Measurements

Assets at Fair Value

Commodity derivative contracts $ — $ 4,040 $ — $ — $ 4,040

$ — $ 4,040 $ — $ — $ 4,040

There were no open commodity derivative contracts as of March 31, 2023.

As of December 31, 2022 the following table summarizes the Company’s assets measured at fair value on a recurring basis by the fair value hierarchy (in thousands):

December 31, 2022

Fair Value Measurements

Liabilities at Fair Value

Netting Assets at Fair Value

Commodity derivative contracts $ — $ 4,429 $ — $ — $ 4,429

$ — $ 4,429 $ — $ — $ 4,429

____________________

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

Commodity Derivatives

1 unchanged sentence

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

There were no open commodity derivative contracts as of March 31, 2023.

As of March 31, 2023, the Company had a receivable of $ 2.1 million related to settled derivative contracts.

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

As applicable, if the Company has open derivative contracts, the Company has recorded such contracts at fair value with changes in derivative contract fair values recognized as a gain or loss on derivative contracts in the condensed consolidated income statements.

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

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

The following table summarizes derivative activity for the three-month periods ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

(Gain) loss on derivative contracts $ ( 1,447 ) $ 1,064

1 unchanged sentence

M aster Netting Agreements and the Right of Offset.

As applicable, the Company has 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 applicable, the Company historically has 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) the Company’s net derivative asset and liability positions as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

Gross Amounts

Gross Amounts Offset

Amounts Net of Offset

Financial Collateral

Derivative contracts - current

$ 4,040 $ — $ 4,040 $ — $ 4,040

December 31, 2021

There were no open commodity derivatives contracts as of March 31, 2023.

As of December 31, 2022, the Company’s open commodity derivative contracts were held with one counterparty.

There were no open derivative positions as of March 31, 2023.

Gross Amounts

5 unchanged sentences

$ 4,429 $ — $ 4,429 $ — $ 4,429

As of September 30, 2022, the Company's open derivative contracts consisted of natural gas commodity derivative contracts under which we will receive a fixed price for the contract and pay a floating market price to the counterparty over a specified period for a contracted volume.

These commodity derivative contracts consisted of the following:

Notional Units Weighted Average Fixed Price per Unit

Natural Gas Price Swaps:

October 2022 - March 2023 2,088,000 MMBtu $ 8.39

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

3 unchanged sentences

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 September 30,

Derivative assets

Natural Gas Current assets - Derivative Contracts $ 4,040

Total net derivative contracts $ 4,040

Type of Contract Balance Sheet Classification December 31, 2022

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

Natural Gas Current assets - Derivative Contracts $ 4,429

Total net derivative contracts $ 4,429

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Property, Plant and Equipment

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

September 30,

2023 December 31,

16 unchanged sentences

$ 239,339 $ 230,876

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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).

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 gross purchase price of $ 47 million.

The sale closed for net proceeds of $ 38.9 million in cash, net of $ 8.1 million in closing adjustments, primarily for production revenue received prior to closing.

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.

During the three months ended September 30, 2021 we recognized additional closing adjustments of $ 0.8 million, which reduced the gain on the sale of assets to $ 18.9 million.

The $ 18.9 million gain represents net proceeds of $ 38.9 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.

Accounts Payable and Accrued Expenses

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

September 30,

2023 December 31,

3 unchanged sentences

Taxes payable 2,618 2,585

Drilling advances 234 234

Total accounts payable and accrued expenses $ 49,142 $ 46,335

Commitments and Contingencies

Legal Proceedings.

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

Included below is a discussion of the Company's various future commitments and contingencies as of March 31, 2023.

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.

1 unchanged sentence

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

As previously disclosed in the Company's 2021 Form 10-K and 10-K/A, there are certain ongoing Cases (as that term is defined in the Company's 2021 Form 10-K and 10-K/A).

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

Although the claims against the Company in each Case have been discharged, the Company remains a nominal defendant as the Cases await final judgement.

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

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

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

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

Legal Proceedings.

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

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

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

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

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

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

• In re SandRidge Energy, Inc.

Securities Litigation, Case No.

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.

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

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

Both cases were settled with all defendants except the SandRidge Mississippian Trust I (“the Trust”), which is being sued by a class of purchasers of units 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, based on allegations that the Trust, made misrepresentations or omissions concerning various topics including the performance of wells operated by the Company.

The Company is contractually obligated to indemnify the Trust for losses, claims, damages, liabilities and expenses, including reasonable costs of investigation and attorney’s fees and expenses, which it is required to advance.

Such indemnification is not covered by insurance.

Considering the status of the Lanier Trust matter, and the facts, circumstances and legal theories relating thereto, the Company is not able to determine the likelihood of an outcome or provide an estimate of any reasonably possible loss or range of possible loss related thereto.

However, such losses, if incurred, could be material.

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

Separately, the Company had received a demand by two of the settling individual defendants to fund a proposed settlement of $ 17 million with those defendants.

The Company refused and filed an action in Oklahoma state court seeking a declaratory judgment that the defendants were not entitled to indemnification.

As a result of the Company’s refusal to fund the settlement, separate insurance was triggered.

The insurance carriers funded the settlement of $ 17 million and are seeking recovery from the Company in the State court action.

The Company disputes any liability under this demand and intends to continue to vigorously defend against this claim.

Considering the status of this matter, and the facts, circumstances and legal theories thereto, the Company is not able to determine the likelihood of an outcome.

The Company has not established any liabilities relating to this matter.

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

For each interim reporting period, the Company estimates the effective tax rate expected for the full fiscal year and uses that estimated rate in providing for income taxes on a current year-to-date basis.

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.

The Company’s deferred tax assets have been reduced by a valuation allowance due to a determination that it is more likely than not that some or all of the deferred assets will not be realized based on the weight of all available evidence.

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 trailing three-year cumulative negative earnings position, the Company continued to maintain a full valuation allowance against its net deferred tax asset at September 30, 2022 and December 31, 2021.

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, 2022 and 2021.

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized.

The ultimate realization of the deferred tax assets is dependent upon the generation of future income in periods in which the deferred tax assets can be utilized.

In prior years, we determined that the deferred tax assets did not meet the more likely than not threshold of being utilized and thus recorded a valuation allowance.

As of March 31, 2023 and December 31, 2022, we had partially released our valuation allowance on our deferred tax assets by $ 64.5 million.

We anticipate being able to utilize these deferred tax assets based on the generation of future income.

A change in the estimate of future income could cause the valuation allowance to be adjusted in subsequent periods.

The Company had no federal or state income tax expense or benefit for the three-month period ended March 31, 2023 and none for the same period in 2022.

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.

3 unchanged sentences

The Company adopted the tax benefits preservation plan, as amended on March 16, 2021, in order to protect the Company’s ability to use its tax NOLs and certain other tax benefits.

As of September 30, 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.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

As of March 31, 2023, 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, $ 0.7 billion expire during the years 2025 through 2037, while the remaining $ 0.9 billion do not have an expiration date.

In addition, the Company had approximately $ 1.1 billion of state NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation.

Of the $ 1.1 billion in state NOL carryforwards, approximately $ 200.0 million are derived from states the Company currently does not operate in.

Of the remaining state NOL carryforwards, $ 643.0 million do not have an expiration date and $ 247.0 million expire during the years 2026 through 2037.

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, 2022 and December 31, 2021.

The Company did not have unrecognized tax benefits at March 31, 2023 and December 31, 2022.

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

2 unchanged sentences

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

Common Stock, Performance Share Units, and Stock Options .

At September 30, 2022, the Company had approximately 250.0 million shares of common stock authorized, 36.9 million shares of common stock, par value $ 0.001 per share, issued and outstanding.

Further, at September 30, 2022, the Company had an immaterial number of unvested restricted stock awards, 0.3 million shares of unvested restricted stock units, 0.2 million unvested stock options outstanding, and an immaterial number of unvested performance share units.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Company issued approximately 4.9 million Series A warrants and 2.1 million Series B warrants that were 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 2016 bankruptcy reorganization plan.

Capital Stock and Equity Awards .

Our authorized capital stock consists of 300 million shares, which include 250 million shares of common stock, $ 0.001 par value per share and 50 million shares of preferred stock, par value $ 0.001 per share.

At March 31, 2023, the Company had 36.9 million shares of common stock issued and outstanding.

Further, at March 31, 2023, the Company had an immaterial number of unvested restricted stock awards, 0.2 million shares of unvested restricted stock units, and 0.2 million unvested stock options outstanding.

During the fourth quarter of 2016, the Company 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.

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

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

During the quarter ended September 30, 2022, warrant holders exercised 91 Series A warrants and 41 Series B warrants for 132 shares of common stock.

Upon expiration, the entirety of the 4.9 million Series A warrants and 2.1 million Series B warrants were cancelled and the carrying value was transferred to Additional paid-in capital in the accompanying condensed consolidated balance sheets.

Share Repurchase Program.

3 unchanged sentences

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 three or nine-month periods ended September 30, 2022.

The following table disaggregates the Company’s revenue by source for the three and nine-month periods ended September 30, 2022 and 2021:

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

2022 2021 2022 2021

The Company did not repurchase any common stock under the Program during the three-month periods ended March 31, 2023 or March 31, 2022.

The Tax Benefits Preservation Plan .

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

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

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

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

(i) the time at which the Rights are redeemed pursuant to the Tax Benefits Preservation Plan, (ii) the time at which the Rights are exchanged pursuant to the Tax Benefits Preservation Plan, (iii) 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, (iv) 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 (v) the Close of Business on July 1, 2023.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Company adopted the Tax Benefits Preservation Plan, as amended on March 16, 2021, in order to protect shareholder value against a possible limitation on the Company’s ability to use its tax net operating losses (the “NOLs”) and certain other tax benefits to reduce potential future U.S.

federal income tax obligations.

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

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

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

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

The following table disaggregates the Company’s revenue by source for the three-month periods ended March 31, 2023 and 2022:

Three Months Ended March 31,

(In thousands)

3 unchanged sentences

Total revenues $ 43,147 $ 57,487

$ 70,899 $ 46,584 $ 198,146 $ 114,403

(1) Nine months ended September 30, 2021 includes 36 days of production and related revenues for NPB, which was sold on February 5, 2021.

Oil, natural gas and NGL revenues.

9 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the Company had revenues receivable of $ 25.4 million and $ 18.8 million, respectively.

The Company did no t record any bad debt expense on revenues receivable nor write-offs during the three and nine-month periods ended September 30, 2022 and 2021, as the Company’s purchasers of oil, natural gas and NGL have had no issues of payment collectability or lack of credit worthiness with the Company.

As of March 31, 2023 and December 31, 2022, the Company had revenues receivable of $ 15.2 million and $ 21.8 million, respectively.

The Company did no t record any bad debt expense on revenues receivable nor write-offs during the three and three-month periods ended March 31, 2023 and 2022, as the Company’s purchasers of oil, natural gas and NGL have had no issues of payment collectability or lack of credit worthiness with the Company.

SANDRIDGE ENERGY, INC.

5 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended September 30, 2022

Basic earnings per share

$ 53,725 36,797 $ 1.46

Effect of dilutive securities

Restricted stock units — 263

Restricted stock awards — 2

Performance share units (1) — —

Stock options — 88

Diluted earnings per share (2)

$ 53,725 37,150 $ 1.45

Three Months Ended September 30, 2021

Basic earnings per share $ 28,599 36,577 $ 0.78

Effect of dilutive securities

Restricted stock units — 343

Restricted stock awards — 28

Performance share units (1) — —

Stock options — 48

Diluted earnings per share (2)

$ 28,599 36,996 $ 0.77

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Basic earnings per share

7 unchanged sentences

$ 23,758 37,110 $ 0.64

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Basic earnings per share $ 34,724 36,635 $ 0.95

9 unchanged sentences

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, restricted stock awards and stock options were included for the three and nine-month periods ended September 30, 2022 and 2021 as their effect was dilutive 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 periods ended March 31, 2023 and 2022 as their effect was dilutive under the treasury stock method.

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