What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 124 added, 51 removed, 409 unchanged (30% of the section changed)

4 unchanged sentences

(In thousands)

September 30,

2024 December 31,

3 unchanged sentences

Accounts receivable, net 28,506 22,166

Derivative contracts 1,284 —

Prepaid expenses 886 430

7 unchanged sentences

Other property, plant and equipment, net 81,694 86,493

Derivative contracts 383 —

Other assets 3,172 3,130

14 unchanged sentences

250,000 shares authorized;

37,182 issued and outstanding at June 30, 2024 and 37,091 issued and outstanding at December 31, 2023

37,205 issued and outstanding at September 30, 2024 and 37,091 issued and outstanding at December 31, 2023

Additional paid-in capital 1,004,264 1,071,021

7 unchanged sentences

(In thousands, except per share data)

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

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

2024 2023 2024 2023

32 unchanged sentences

Accumulated Deficit Total

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Balance at January 1, 2024

12 unchanged sentences

Balance at June 30, 2024 37,182 $ 37 $ 1,007,798 $ ( 583,028 ) $ 424,807

Six Months Ended June 30, 2023

Issuance of stock awards, net of cancellations 23 — — — —

Tax withholdings paid in exchange for shares withheld on employee vested stock awards — — ( 129 ) — ( 129 )

Stock-based compensation — — 707 — 707

Dividends to shareholders — — ( 4,112 ) — ( 4,112 )

— — — 25,484 25,484

Balance at September 30, 2024

37,205 $ 37 $ 1,004,264 $ ( 557,544 ) $ 446,757

Nine Months Ended September 30, 2023

Balance at January 1, 2023

10 unchanged sentences

Balance at June 30, 2023 36,966 $ 37 $ 1,078,070 $ ( 623,409 ) $ 454,698

Issuance of stock awards, net of cancellations 125 — — — —

Tax withholdings paid in exchange for shares withheld on employee vested stock awards — — ( 718 ) — ( 718 )

Stock-based compensation — — 544 — 544

Dividends to shareholders ( 3,677 ) ( 3,677 )

— — — 18,670 18,670

Balance at September 30, 2023 37,091 $ 37 $ 1,074,219 $ ( 604,739 ) $ 469,517

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

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Depreciation, depletion, and amortization 21,718 16,285

Deferred income taxes ( 15,439 ) —

(Gain) loss on derivative contracts ( 1,866 ) ( 1,447 )

1 unchanged sentence

Stock-based compensation 1,779 1,422

Other 118 118

Changes in operating assets and liabilities ( 3,972 ) 8,040

22 unchanged sentences

Asset retirement obligation capitalized $ 51 $ 12

Asset retirement obligation removed due to divestiture $ — $ ( 137 )

Change in dividends payable $ 42 $ 253

58 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, accounts payable and accrued expenses and other current liabilities included in the unaudited condensed consolidated balance sheets approximated fair value at June 30, 2024 and December 31, 2023.

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 and liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

The Company had no assets or liabilities classified in Level 2 of the hierarchy as of June 30, 2024 and December 31, 2023.

The Company had assets classified in Level 2 of the hierarchy as of September 30, 2024, as described below, and no assets or liabilities classified in Level 2 of the hierarchy as of December 31, 2023.

Level 2 Fair Value Measurements

4 unchanged sentences

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

Level 3 Fair Value Measurements

Acquisitions.

The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its oil and gas properties acquired.

The Company recognized the assets acquired in our acquisitions at cost at a relative fair value basis (See “Note 5 — Acquisitions” to the accompanying unaudited condensed consolidated financial statements included in this Quarterly Report for additional information).

Fair value was determined using a discounted cash flow model.

The underlying future commodity prices included in the Company’s estimated future cash flows of its oil and gas properties were determined using NYMEX forward strip prices as of the closing date of each acquisition.

The estimated future cash flows also included assumptions independently prepared by Cawley, Gillespie & Associates for the estimates of production from the oil and natural gas properties, future operating, development costs and income taxes of the acquired properties and risk adjusted discount rates.

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Fair Value - Recurring Measurement Basis

As of September 30, 2024 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, 2024

Fair Value Measurements

Assets at Fair Value

Commodity derivative contracts $ — $ 2,190 $ — $ 523 $ 1,667

$ — $ 2,190 $ — $ 523 $ 1,667

(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 June 30, 2024 and December 31, 2023.

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

1 unchanged sentence

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table summarizes derivative activity for the six-month periods ended June 30, 2024 and 2023 (in thousands):

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

The following table summarizes derivative activity for the three and nine-month periods ended September 30, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

4 unchanged sentences

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 its counterparties.

There were no open commodity derivatives contracts as of June 30, 2024 and December 31, 2023.

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 the earnings of the relevant period.

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

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, 2024 (in thousands):

September 30, 2024

Gross Amounts

Gross Amounts Offset

Amounts Net of Offset

Financial Collateral

Derivative contracts - current

$ 1,694 $ ( 410 ) $ 1,284 $ — $ 1,284

Derivative contracts - non-current $ 496 $ ( 113 ) $ 383 $ — $ 383

$ 2,190 $ ( 523 ) $ 1,667 $ — $ 1,667

As of September 30, 2024, 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:

Period Type of Derivative Instrument Index (1)

Daily Volume (Bbl) Weighted Average Price Per Barrel

October 2024 - December 2024 Swaps Mont Belvieu OPIS 400 $ 42.76

October 2024 - December 2024 Swaps NYMEX WTI 900 $ 74.85

January 2025 - December 2025 Swaps Mont Belvieu OPIS 300 $ 39.69

January 2025 - December 2025 Swaps NYMEX WTI 500 $ 71.60

January 2026 - June 2026 Swaps NYMEX WTI 300 $ 68.67

(1) NGL swaps exclude ethane

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,

2024 December 31,

1 unchanged sentence

$ 1,677,882 $ 1,538,724

17,487 11,197

Total oil and natural gas properties

12 unchanged sentences

$ 370,106 $ 242,613

On August 30, 2024, the Company closed the previously announced acquisition of oil and natural gas properties in the Cherokee Play of the Western Anadarko Basin, pursuant to the Purchase and Sale Agreement signed on July 29, 2024, as amended on August 30, 2024 (the “Cherokee Play Acquisition”).

The Company funded the acquisition with cash on hand.

A portion of the purchase price has been held in escrow.

The Cherokee Play Acquisition has been accounted for as an asset acquisition in accordance with ASC 805.

The fair value of the consideration paid by the Company and allocation of that amount to the underlying assets acquired, on a relative fair value basis, was recorded on the Company’s books as of the date of the closing.

Determining the fair value of the assets acquired and liabilities assumed requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of oil and natural gas properties.

The inputs and assumptions related to the oil and natural gas properties are categorized as Level 3 in the fair value hierarchy.

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table represents the allocation of the total cost of the Cherokee Play Acquisition to the assets acquired and liabilities assumed as of the Cherokee Play Acquisition closing date:

(in thousands)

Cash at closing $ 101,686

Holdback and escrow (1)

Total Consideration $ 123,845

Allocation of Total Consideration

Oil and natural gas properties $ 129,681

Total Assets $ 129,681

Accounts payable and accrued expenses $ 5,836

Total liabilities assumed 5,836

Net Assets Acquired and Liabilities Assumed $ 123,845

__________________

(1) Represents escrowed amounts for conveyed interest upon completion of well included in amended Purchase and Sale Agreement (the “PSA”), funds held in escrow pending title due diligence and funds held in escrow to satisfy Seller’s indemnification obligations under Article XII of the PSA.

As part of the Cherokee Play Acquisition, the Company entered a joint development agreement with the seller which provides an option for the Company’s participation in the drilling and completion operations of drilling spacing units.

The joint development agreement terminates upon the earlier of a mutual agreement between each party or the conclusion of drilling and completion operations of the drilling spacing units.

Accounts Payable and Accrued Expenses

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

September 30,

2024 December 31,

5 unchanged sentences

Commitments and Contingencies

Included below is a discussion of the Company's various future commitments and contingencies as of June 30, 2024.

Included below is a discussion of the Company's various future commitments and contingencies as of September 30, 2024.

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.

2 unchanged sentences

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

SANDRIDGE ENERGY, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Legal Proceedings.

10 unchanged sentences

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.

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

Such indemnification is not covered by insurance.

8 unchanged sentences

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.

SANDRIDGE ENERGY, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

3 unchanged sentences

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.

We have partially released our valuation allowance on our deferred tax assets by $ 50.6 million as of June 30, 2024 and December 31, 2023.

We have partially released our valuation allowance on our deferred tax assets by $ 66.0 million and $ 50.6 million as of September 30, 2024 and December 31, 2023, respectively.

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 or six-month periods ended June 30, 2024 and 2023.

The Company recognized $ 15.4 million in federal and state income tax benefit for the three and nine-month periods ended September 30, 2024 and no federal or state income tax expense or benefit for the three and nine-month periods ended September 30, 2023.

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.

5 unchanged sentences

The Company adopted the Tax Benefits Preservation Plan, as amended on March 16, 2021 and June 20, 2023, in order to protect the Company’s ability to use its tax NOLs and certain other tax benefits.

As of June 30, 2024, 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 September 30, 2024, 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.

3 unchanged sentences

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 June 30, 2024 or December 31, 2023.

The Company did not have unrecognized tax benefits at September 30, 2024 or December 31, 2023.

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

7 unchanged sentences

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

At June 30, 2024, the Company had 37.2 million shares of common stock issued and outstanding.

Further, at June 30, 2024, the Company had 0.1 million of unvested restricted stock awards, 0.2 million shares of unvested restricted stock units, 0.2 million unvested stock options outstanding and an immaterial number of unvested performance share units.

At September 30, 2024, the Company had 37.2 million shares of common stock issued and outstanding.

Further, at September 30, 2024, the Company had 0.1 million of unvested restricted stock awards, 0.2 million shares of unvested restricted stock units, 0.1 million unvested stock options outstanding and an immaterial number of unvested performance share units.

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 or the prior share repurchase program during the three or six-month periods ended June 30, 2024 or 2023.

The Company did not repurchase any common stock under the Program or the prior share repurchase program during the three or nine-month periods ended September 30, 2024 or 2023.

In January 2024, the Board approved a one-time cash dividend of $ 1.50 per share of the Company's common stock, which was paid on February 20, 2024 to shareholders of record as of the close of business on February 5, 2024.

The aggregate total payout was approximately $ 55.6 million.

Additionally, in March 2024, the Board increased the on-going quarterly dividend to $ 0.11 per share which was paid on March 29 and May 31, 2024, to shareholders of record as of the close of business on March 15 and May 17, 2024, respectively.

Additionally, in March 2024, the Board increased the on-going quarterly dividend to $ 0.11 per share which was paid in March, May, and August 2024.

The aggregate total payout was $ 12.2 million.

The $ 0.11 per share dividend is subject to quarterly approval by the Board.

Dividend payments for the six-month period ended June 30, 2024 totaled $ 64.0 million, which included $ 0.3 million of dividends on vested stock awards.

In May 2023, the Board approved a one-time cash dividend of $ 2.00 per share of the Company’s common stock, which was paid on June 7, 2023 to shareholders of record as of the close of business on May 24, 2023.

The aggregate total payout was approximately $ 73.8 million.

Dividend payments for the nine-month period ended September 30, 2024 totaled $ 68.2 million, which included $ 0.4 million of dividends on vested stock awards.

Cash dividends for the nine-months ended September 30, 2023 totaled $ 77.8 million.

The Tax Benefits Preservation Plan .

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table disaggregates the Company’s revenue by source for the three and six-month periods ended June 30, 2024 and 2023:

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

The following table disaggregates the Company’s revenue by source for the three and nine-month periods ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

16 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, the Company had revenues receivable of $ 11.5 million and $ 14.5 million, respectively.

The Company did no t record any credit losses on revenues receivable nor write-offs during the three and six-month periods ended June 30, 2024 or 2023, 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 September 30, 2024 and December 31, 2023, the Company had revenues receivable of $ 15.2 million and $ 14.5 million, respectively.

The Company did no t record any credit losses on revenues receivable nor write-offs during the three and nine-month periods ended September 30, 2024 or 2023, 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.

6 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Basic earnings per share

7 unchanged sentences

$ 25,484 37,180 $ 0.69

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Basic earnings per share $ 18,670 36,969 $ 0.51

6 unchanged sentences

$ 18,670 $ 37,161 $ 0.50

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Basic earnings per share

7 unchanged sentences

$ 45,403 37,150 $ 1.22

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Basic earnings per share $ 59,065 36,906 $ 1.60

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, performance share units, and stock options were included for the three and six-month periods ended June 30, 2024 as their effect was dilutive under the treasury stock method.

The incremental shares of potentially dilutive restricted stock units and stock options were included for the three and six-month periods ended June 30, 2023 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 and nine-month periods ended September 30, 2024 as their effect was dilutive under the treasury stock method.

The incremental shares of potentially dilutive restricted stock units and stock options were included for the three and nine-month periods ended September 30, 2023 as their effect was dilutive under the treasury stock method.

SANDRIDGE ENERGY, INC.

2 unchanged sentences

Subsequent Events

• On July 29, 2024, the Company entered into a purchase and sale agreement to acquire certain producing assets and leasehold interests in the Western Anadarko Basin for cash consideration of $ 144 million, before customary purchase price adjustments, with an effective date of July 1, 2024.

The Company also entered into a joint development agreement governing its participation in the future development of certain leasehold interests acquired in the acquisition.

The transaction is expected to be funded with cash on hand and is targeted to close by the end of the third quarter of 2024.

• Subsequent to June 30, 2024, the Company entered into the following oil and NGL derivative contracts:

Period Type of Derivative Instrument Index (1)

Daily Volume (Bbl) Weighted Average Price Per Barrel

September 2024 - December 2024 Swaps Mont Belvieu OPIS 400 $ 42.76

September 2024 - December 2024 Swaps NYMEX WTI 900 $ 74.85

January 2025 - December 2025 Swaps Mont Belvieu OPIS 300 $ 39.69

January 2025 - December 2025 Swaps NYMEX WTI 500 $ 71.60

January 2026 - June 2026 Swaps NYMEX WTI 300 $ 68.67

(1) NGL swaps exclude ethane

• On August 6, 2024, the Board declared a cash dividend of $ 0.11 per share of the Company’s common stock, payable on August 30, 2024 to shareholders of record on August 16, 2024.

On November 5, 2024, the Board declared a cash dividend of $ 0.11 per share of the Company’s common stock, payable on November 29, 2024 to shareholders of record on November 15, 2024.

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