Author Topic: SD - SandRidge Energy  (Read 462501 times)

aws

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Re: SD - SandRidge Energy
« Reply #1730 on: March 14, 2019, 12:01:32 AM »
What do people think of the new CEO and the 10-K?  It looks stupid cheap with no debt, 1/3rd of book value, and tax assets of something like $15/sh not included in book value ensuring that if they can ever make a profit it would be tax free.  But then I don't really know how to evaluate their drilling program and all of their cashflow is getting deployed there.

I have recently taken a position in MPO, which also operates in the Miss Lime and tried to merge with SD last year, because I like their plan of pausing drilling and returning capital to shareholders through buybacks.  MPO has less upside potential, but also less likely to waste what they have left in assets.


Gregmal

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Re: SD - SandRidge Energy
« Reply #1731 on: March 14, 2019, 06:37:55 PM »
I admittedly know nothing current(from within the past quarter or two) regarding economics; this one is strictly in the no touch category for me. But, has SD ever demonstrated that they can sustainably profit from drilling their locations?

I ask this not to be a jerk but my understanding of the Mississippi Lime, and pretty much all of their previous endeavors, plus the  trusts they spun out, all demonstrate that this is a total crap shoot, at best. The decline rates are way higher than industry standard, and it seems they just remain committed to pouring money into the assets they have rather than cutting bait and liquidating/selling themselves.

Spekulatius

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Re: SD - SandRidge Energy
« Reply #1732 on: March 14, 2019, 08:19:29 PM »
It looks like one roughly buys this for half the asset value (PV-10). The current business plan suggest they spent $170M in Capex this year and they will have $180M in EBITDA, which means that they are at best FCF neutral. they really should be slowly (or quickly ! ) liquidating, since they are trading for half the asset value, which if this continues, means that every dollar in cash gets converted into 50c in the ground.

So, if they  continue to operate cash flow neutral all is good, until they find another sinkhole and an asset is written off, which is pretty much unavoidable in the E&P business. My prediction is that with the current modus operandi, the shareholders won’t ever see a cent, management will keep drilling, until something untoward happens and/or bankers shut them down. The only way out for shareholders is  if another company buys them out.
« Last Edit: March 15, 2019, 08:07:24 AM by Spekulatius »
To be a realist, one has to believe in miracles.

meiroy

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Re: SD - SandRidge Energy
« Reply #1733 on: March 15, 2019, 06:39:39 AM »

Icahn owns 13% of the company and has control of the board.


aws

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Re: SD - SandRidge Energy
« Reply #1734 on: March 15, 2019, 09:57:23 AM »
I guess we'll have to see if Icahn's board control and new CEO can avoid the favorite pastime of a lot of E&P companies by destroying the value they have left.  There is enormous upside if that can be accomplished.  They were offered what were hopefully insulting low values when considering selling the company, and they have the balance sheet where they could take on acquisitions in a depressed market and hopefully turn a profit.  And with the tax assets the first couple billion or so that they did make would be tax free as well.


Spekulatius

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Re: SD - SandRidge Energy
« Reply #1735 on: March 15, 2019, 01:15:23 PM »
Icahn having control of the company, especially when holding only 13% of the shares is a mixed bag. He usually makes sure that he gets to eat first....
To be a realist, one has to believe in miracles.

aws

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Re: SD - SandRidge Energy
« Reply #1736 on: March 15, 2019, 01:40:20 PM »
Yeah I'd like to see him buying more stock since the stock is dramatically lower than his purchase price.  Assuming he can, I heard there was a poison pill but I imagine that they could get rid of it now.

It's funny I was just reading through the 10-k and the share repurchases caught my eye.  It looked like nearly 5 million shares repurchased below $10 in the quarter which I thought was huge considering the 35 million or so outstanding.  Then I realized that the 4,957 shares detailed was not omitting any zeroes, so literally 4,957 shares for like $45k.  So used to seeing those things in thousands or millions.  It's probably just a tax thing for employee stock awards, but still makes you wonder why they couldn't allocate any of their cash to buybacks with such a low price.  Even just an authorization that they may not end up using would be nice.  I can't imagine they have any restrictions on doing so with zero debt.

meiroy

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Re: SD - SandRidge Energy
« Reply #1737 on: March 15, 2019, 05:24:38 PM »
Icahn having control of the company, especially when holding only 13% of the shares is a mixed bag. He usually makes sure that he gets to eat first....

That's an excellent point.