SANDRIDGE ENERGY INC Q1 FY2025 earnings call

Key Points

• Production increased approximately 17% and 30% on a BOE and oil basis year-over-year.
• Revenue was $43 million, a 41% increase year-over-year and 9% sequential increase, benefited by improved commodity price realizations.
• Adjusted EBITDA was $25.5 million, up from $15 million prior year.
• Cash including restricted cash at quarter end was just over $100 million, over $2.75 per share. Paid $4 million in dividends during the quarter.
• Drilled the first well of the operated 1 rig Cherokee drilling program, with first production anticipated later this month. Four non-ops and industry wells offsetting this well have initial average production rates over 1,000 bbls oil or 2,000 BOE per day.
• Capital program: Planned to drill 8 operated Cherokee wells with 1 rig, complete 6 wells, with most production in H2. Gross well costs between $9M - $11M. 13 wells converted to rod pumps, 5 wells reactivated in Q1.
• Adjusted G&A was $2.9M, favorable vs peers. Legacy assets ~99% held by production.
• ESG commitments: Implemented disciplined processes, will evaluate M&A opportunities disciplinedly.

In the first quarter, total production averaged nearly 18 MBoe per day, a 17% increase on a BOE basis and 30% on an oil basis year-over-year. Revenue was approximately $43 million, representing a 41% increase compared to the first quarter of 2024 and a 9% sequential increase. Adjusted EBITDA was $25.5 million in the quarter, up from roughly $15 million in the prior year period. Commodity price realizations for the quarter were $69.88 per barrel of oil, $2.69 per MCF of gas, and $20.07 per barrel of NGL. Production was meaningfully hedged, with nearly 30% of guided production hedged, including over 40% of natural gas production and roughly 15% of oil. Adjusted G&A for the quarter was approximately $2.9 million, or $1.83 per BOE. Net income was $13 million during the quarter, or $0.35 per basic share, and adjusted net income was $14.5 million, or $0.39 per basic share. Adjusted operating cash flow was roughly $26 million, and free cash flow before acquisitions was approximately $14 million during the quarter.

Forward-Looking

• Anticipate growing oilier production volumes further in H2, exit rates projected around 19 MBoe per day and oil production rates up ~30% from Q1.
• Capital program: Intend to spend $66M - $85M in 2025, with $47M - $63M in drilling/completions and $19M - $22M in workovers. Could moderate or curtail capital program if headwinds persist.
• Flexibility to adjust capital based on commodity prices, results, and other factors, including deferring projects, minimizing spending in extreme downside cases.

Risks

• Commodity price volatility, including fluctuations in WTI and Henry Hub prices.
• Operational costs and inflationary pressures impacting well costs.
• Macroeconomic factors affecting commodity prices and market conditions.
• Lease expirations and need to manage them while adjusting capital program.

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