Final august investor presentation

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  1. 1. 1 INVESTOR PRESENTATION AUGUST 2017
  2. 2. Cautionary Statements This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include statements about the companys corporate strategies, future operations, development plans and appraisal programs, our drilling inventory and locations, estimated production, rates of return, reserves, projected capital expenditures, projected operating and other costs, operational optimization initiatives, anticipated efficiency improvements and cost reductions, liquidity and capital structure. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, and developing oil and natural gas reserves, the availability and terms of capital, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, regulatory changes and other factors, many of which are beyond our control. We refer you to the discussion of risk factors in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2016 and in comparable Risk Factors sections of our Quarterly Reports on Form 10-Q filed after such Form 10-K. All of the forward-looking statements made in this presentation are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements. The SEC permits oil and natural gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves, as each is defined by the SEC. At times we use the terms "EUR" (estimated ultimate recovery) and recoverable reserves that the SECs guidelines prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved, probable or possible reserves and, accordingly, are subject to substantially greater risk of being actually realized by the company. For a discussion of the companys proved reserves, as calculated under current SEC rules, we refer you to the companys amended Annual Report on Form 10-K referenced above, which is available on our website at www.sandridgeenergy.com and at the SECs website at www.sec.gov. 1 Forward Looking Statement www.sandridgeenergy.com
  3. 3. SandRidge Energy With a strong balance sheet, we have built a portfolio of three project areas with competitive project IRRs and significant location inventories. Investment will continue with the development of both our NW STACK and North Park Niobrara oil projects and high- graded harvest of our Mississippian position, with total company oil production turning the corner in late 2017. 2 www.sandridgeenergy.com $563MM of liquidity including $145MM cash1 Moderate level of outspend Protect the balance sheet High-graded harvest Cash flow generation Continued cost reductions Well design innovation 50% of 2017 D&C Capex Expands drilling inventory Dominant acreage position held by production or unit Multiple benches and tighter spacing upsides >80% oil resource 50% of 2017 D&C Capex Meramec & Osage 70k net acres in 3 counties Major, Woodward & Garfield Counties Increased oil exposure (1) Cash balance as of July 31st
  4. 4. Valuation as of August 2, 2017 Market Capitalization $690 Million Debt 38 Less: Available Cash (145) Enterprise Value $583 Million Liquidity Cash $145 Million Undrawn Revolver2 418 Cash + RBL $563 Million Production & Reserves Q217 Production 42.1 MBoepd (27% oil) YE16 Proved Reserves3 180 MMBoe (31% oil) $763MM Strip PV-10 3 SandRidge Energy Overview Unlevered with strong liquidity and portfolio of oil-weighted opportunities (1) Held by production (HBP) or held by unit (2) $425 million borrowing base less $7 million in letters of credit (3) Reserves as of 12.31.16 and PV-10 using actual realized pricing and 3.20.17 Strip pricing (~$50/$3.00). The PV-10 of strip-based proved reserves is a non-GAAP financial measure. A reconciliation of the standardized measure (GAAP) to the PV-10 of our proved reserves is located on the final slide. 390k 79% HBP 125k 57% HBP1 70k 30% HBP Large Acreage Positions in Three Assets Held by Production or Federal Unit
  5. 5. NW STACK $200 million Drilling Participation Agreement with $100 million of initial funding 902 Boepd (81% oil) 30-Day IP on Campbell 2015 1-26H, XRL targeting Meramec in Major County 4 Q217 Operational and Financial Results GUIDANCE UPDATE Successful NW STACK drilling and North Park outperformance build momentum FINANCIAL HIGHLIGHTS North Park Niobrara Improved type curve due to shallower oil decline Resumed drilling in June with one rig targeting multiple zones Extended favorable ~$3.15 differential to WTI through 2018 Results $46 million of adjusted EBITDA with $57 million of capex LOE reductions driven by electrical efficiency initiatives and chemical program improvements $15 million proceeds from non-core asset sales Liquidity & Leverage $563 million total liquidity, including $145 million of cash $418 million available on undrawn revolver ($7 million in letters of credit) 0.0x net leverage Raising full year production guidance by 200 MBoe to 14.2 14.9 MMBoe, with oil comprising 50% of the increase Decreasing LOE by 15% to $7.00 - $7.50 per boe, or $16 million at the midpoint of guidance Capex guidance increasing to $250 - $260 million OPERATING ACTIVITY
  6. 6. 5 NW STACK Asset Overview Meramec and Osage development extending northwest Overlaying Major, Garfield, Woodward, Blaine and Dewey counties Approximately 100 miles east to west Meramec and Osage formations Same productive formations as STACK Structurally deepens from northeast to southwest Over-pressured reservoir extends into NW STACK High oil content
  7. 7. 6 NW STACK Primary Targets Meramec 5,800-12,400 TVD Interbedded shales, sands, and carbonates Thickness from 50-160 Matrix porosity development in limey-sand zones with some secondary fracturing Osage 5,900-12,500 TVD Limestone and cherts Thickness from 450-1,300 Natural fracturing enhances productivity
  8. 8. 7 NW STACK SD History SandRidge has operated in the NW STACK for many years NW STACK activity began on the southern acreage of Miss Lime asset Drilled Osage wells in 2014-2015 Meramec targeting commenced in 2016 Expanded acreage position through organic leasing and 13k acreage acquisition in early 2017 Signed Drilling Participation Agreement in July 2017 SD Initial Meramec/Osage Wells
  9. 9. 8 NW STACK Drilling Participation Agreement Transaction highlights NW STACK asset value Drilling Agreement Terms $200MM agreement with $100MM initial funding to drill within 30 dedicated sections Wellbore-only conveyance, targeting the Meramec Carry and reversionary interest structure SandRidge retains all operational control Key Highlights and Benefits to SandRidge Accelerated delineation increases net asset value Reduced capital expenditure requirements with carried working interest structure 12 additional laterals in 2017 (to 34 from 22) while reducing D&C $5MM Realizes higher rate of return with carry and reversionary working interest structure Drilling Program Primarily Within Major and Woodward Counties
  10. 10. 9 NW STACK Activity Delineating NW STACK alongside other operators 20 Rigs from 12 Operators SandRidge Activity 2017 D&C capex of $60-65MM 34 laterals planned for 2017 Targeting $3.3MM D&C per lateral Drilling Meramec formation Retaining Osage as upside Optimizing completion designs Coring and 3D seismic enhance reservoir characterization
  11. 11. 10 Industry Meramec Results Meramec production has averaged 700-800 Boepd and ~60% oil on wells surrounding SDs NW STACK acreage position
  12. 12. 11 Industry Osage Results Osage production has averaged 700-800 Boepd and ~40% oil on wells surrounding SDs NW STACK acreage position
  13. 13. 12 Dominant position of 125k net acres Stacked Niobrara pay with multiple benches 57% held by production or federal unit 30 MMBoe (87% oil) of P1 Reserves1 1,300 2P locations Q217 production of 172 MBo (1.9 MBopd) 10 wells drilled in 2016, including one XRL North Park Niobrara Asset Overview Large contiguous acreage position in Jackson County, Colorado Repeatable resource play expands drillable inventory and enhances oil value (1) SEC Reserves as of 12.31.16
  14. 14. 13 North Park Niobrara Analogous to Wattenberg North Parks gross Niobrara interval ranges from 460 - 500 feet thick
  15. 15. 14 Targeting Multiple Niobrara Benches Stacked pay potential with proven production from multiple benches Proved production from C and D benches Drilling B bench this year Initial production ranging 400-550 Boepd (90% oil) per 1-mile lateral C bench