SandRidge Energy Inc., Oklahoma City, recently closed two transactions that it said would “improve operating efficiency” of the company (OGJ Online, Mar. 20, 2018).
In the Central Basin Platform (CBP) region of the Permian basin, SandRidge sold essentially all of its oil and gas properties, rights, and related assets, together with 13.125 million common units of the SandRidge Permian Trust, to an unaffiliated party for net proceeds of $14.5 million. The transaction removes a large population of low-rate and shut-in wells, collectively averaging 1 boe/d/well and with direct lifting costs of $30.50/bbl. The divestiture of almost 1,500 wells eliminates 32% of the company’s total asset retirement obligations.
“The CBP properties accounted for more than 12% of our total operating expenses, while contributing only 4% of the production during the first half of 2018. The sales price of these properties represents an attractive valuation, particularly considering their minimal growth potential and royalty interest burden, which requires SandRidge to cover 100% of operating costs but only receive 34% of revenues,” said Bill Griffin, president and chief executive officer. “Exiting the [CBP] simplifies the company's portfolio and operations, allowing SandRidge to increase our focus on executing our long-term development and growth strategy,” he said.
Separately, on Nov. 2, the company acquired oil and gas properties, rights, and related assets in the Mississippi Lime and NW STACK areas of Oklahoma and Kansas for $25.1 million. The acquired interests are additive to existing SandRidge ownership positions. The company operates 80% of the subject wells and holds an existing working interest in most of the remaining wells operated by others. As of September, the had monthly net production of 3,775 boe/d and monthly net operating income of $1.5 million. In addition, SandRidge acquired an additional 13.2% interest in its produced water gathering and disposal system.
Pro forma for the two transactions, the company expects a net increase in current production of 2,615 boe/d.
