SandRidge Energy for HWeil on 3-24-15

1TUESDAY, MARCH 24, 2015HOWARD WEILENERGY CONFERENCE2SandRidgeEnergy.com2DISCLAIMERForward Looking StatementThis presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Section 21E of the Securities Exchange Act of 1934, as amended. These statements express a belief, expectation or intention and are generally accompanied accompanied by words that convey projected future events or outcomes. The forward-looking statements include statements about the companys corporate companys corporate strategies, future operations, development plans and appraisal programs, and projections and estimates of our drilling inventory and inventory and locations, production, reserves, rates of return, projected capital expenditures and other costs, efficiency initiative outcomes, infrastructure infrastructure utilization and investment, liquidity, debt maturities, capital structure, asset sales, price realizations and hedging strategies. We have based based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and of risks and uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, and developing oil and natural gas natural gas reserves, the availability and terms of capital, our timely execution of hedge transactions, credit conditions of global capital markets, changes in 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 risk factors in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2014 and in comparable Risk Factors Factors sections of our Quarterly Reports on Form 10-Q filed after the date of this presentation. All of the forward-looking statements made in this this presentation are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially substantially realized, they may not have the expected consequences to or effects on our company or our business or operations. Such statements are not are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We 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 defined by the SEC. At times we use the term "EUR" (estimated ultimate recovery) and refer to their location and potential to provide estimates that the SECs 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, proved, probable or possible reserves and, accordingly, are subject to substantially greater risk of being actually realized by the company. For a discussion of discussion of the companys proved reserves, as calculated under current SEC rules, we refer you to the companys Annual Report on Form 10-K referenced referenced above, which is available on our website at www.sandridgeenergy.com and at the SECs website at www.sec.gov.Regulation G Disclosure: This presentation includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those those measures to the most directly comparable GAAP measures is available on our website at www.sandridgeenergy.com.34SandRidgeEnergy.com4FOCUS AREA ASSET MAPa) Non-GAAP financial measure. Refer to the Disclaimer slide for additionaldisclosureb) As of 12/31/2014c) SandRidge consolidated reserves as of YE2014 including royalty trustsd) Based on YE14 SEC pricing ($91.48 / 4.35)MARKET VALUE ($ in millions)Market Cap (3/18/2015) $808Net Debt(a)(b)3,014Preferred Stock 565Enterprise Value $4,387ASSET OVERVIEW(c)Q414 Production (MBoe/d) 88.4Proved Reserves (MMBoe) 516% Reserves as Liquids 42%YE14 PV10 Value ($Bln)(d)$5.5 Mid-Continent, Horizontal Mississippian Leader Fractured Carbonate Focus 2015 Capex Plan of $700MM $2.4MM Targeted Lateral Costs 484 MBoe EUR 715,000 acres, 55% held by production Stacked Pay Development: Mississippian, Chester & WoodfordSANDRIDGE ENERGY OVERVIEWSD QUICK FACTS5SandRidgeEnergy.com5SUCCESS DEMONSTRATED BY HITTING GROWTH GUIDANCE AND ADDING RESERVES Reserves up 37%, PUD type curve up 27% 2014 production of 29 MMBoe, 1% over guidance; Midcon grew 47% YOY to Q414 76 MBoe/dIMPROVED CAPITAL EFFICIENCY THROUGH 2015 AND INTO 2016 $2.4MM lateral cost target for 2H15 Lower lateral cost and improved type curve provide 27% more EUR for 80% of cost 2014 multilateral program at 85% of cost of single laterals for 100% of 90-day type curve volumeNEW COVENANT PROVIDES BALANCE SHEET FLEXIBILITY $900MM borrowing base affirmed in February 2.25x senior secured covenantINTRODUCING 2015 GUIDANCE - PRESERVES LIQUIDITY AND PRODUCTION BASE $700MM Capex, ~6% organic production growth Ramping down from current 19 rigs to 7 40% of 2015 program comprised of multilaterals Targeting $200MM of capital raised from asset sales and monetizationACTIONS TO THRIVE IN LOWER PRICE ENVIRONMENT6SandRidgeEnergy.com6Development inventory is preserved with lower costs and expanded with oil price recoveryreturns are preservedAt lower well costsdrilling location count grows.Service cost reductions plus increased efficiencies while drilling more multilateralsType curve returns at target costs and current strip comparable to 35% IRRs from higher price and cost environment in 201427% MORE EUR FOR 80% OF THE COST* 02.13.15 Strip Pricing * PUDs + Risked Probables @ Strip7SandRidgeEnergy.com7PRINCIPLESDrilling projects must generate hurdle returns at strip pricingUnlock value in this market Efficiency gains Service cost reductions Expanded use of multilateralsEfficient infrastructure utilizationTransition toward operating within cash flowsDefend and Extend capabilitiesPLANNED SPEND AND RESULT$700MM Capex budget28.0-30.5 MMBoe guided production ~ 6% Year-over-Year volume growth Quick ramp down to lower rig countAppraisal New Ventures commitment40% multilaterals in drilling plan2015 CAPEX OF $700MM VS. $1.6B IN 20148SandRidgeEnergy.com8 As of 02.25.2015 Positions displayed include royalty trusts, but are exclusive of basis hedges. Liquids hedged to NYMEXWTI; Natural Gas hedged to NYMEX Henry Hub; NGL barrels hedged at 3:1 ratio to WTI.23STRONG HEDGE POSITION9SandRidgeEnergy.com9MONETIZATION OPPORTUNITIES Asset Sale Options SWG infrastructure Real Estate Non-core productionCAPITAL DISCIPLINE Capex Set at $700MM Capital Efficiency Gains Operational Improvements Service Cost Reductions Expanded use of MultilateralsFINANCIAL POSITIONCAPITAL STRUCTURE FOCUS Ample Liquidity $900MM borrowing base New senior secured covenant (2.25x EBITDA beginning 3/31/15) No bond maturities before 2020(a) $100MM drawn as of February 20, 201510SandRidgeEnergy.com102014 FULL YEAR RESULTS 37% Proved reserves growth 27% Type curve growth 47% Midcon production growth 1% over production guidance midpoint Added Garfield county to focus area Pioneered multilateral success in Miss Initiated redevelopment of Chester & Woodford Prepared infrastructure monetization (S1d SWG)2014 ACHIEVEMENTSRepeated Demonstration of Operational SuccessQ414 ACTIVITY 76 MBoe/d in Mid-Continent 121 New Midcon laterals delivered 378 Boe/d 30-day IPs 10 New Chester wells delivered 470 Boe/d 30-day IPs (59% oil) 3 New Woodford wells delivered 397 Boe/d 30-day IPs (77% oil) Permian Royalty Trust drilling completedTOTAL SD PRODUCTION* Excludes production related to divested GOM assets.*11SandRidgeEnergy.com11Note: SandRidge consolidated reserves as of YE 2014 including royalty trusts(a) Based on YE 2014 SEC pricing ($91.48/4.35)(b) 02.13.15 Strip Pricing 516 MMBoe (+37% YOY) $5.5B SEC PV-10(a) (+34% YOY) $3.3B PV-10(b)at Strip 604% All-in Reserve Replacement 65% Proved DevelopedYEAR END PROVED RESERVES +37% All-in F&D $9.00/Boe 42% Liquids Mix $10.69 Proven Value/Boe(a) 18.7 Years Reserve Life 12.2 Years Proved Developed Reserve LifeRESERVES MIXRESERVES GROWTH12SandRidgeEnergy.com12MIDCONTINENT WELL PERFORMANCESupports Type Curve Growth13SandRidgeEnergy.com13(a) Represents decline from month 1 to month 13(b) Wet gas, wellhead volumes2015GAS: 1.6 Bcf30 Day IP(b) (Mcf/d)1stYear Decline(a)B Factor96662%2.002015NGL: 97 MBblsYield (Bbls/MMcf)Shrink51.686.1%2015OIL: 118 MBo30 Day IP (Bo/d)1stYear Decline(a)B Factor19080%1.262015 MISSISSIPPIAN PUD TYPE CURVE484 MBoe, 44% LiquidsMBoe14SandRidgeEnergy.com14MEANINGFUL WELL COST REDUCTIONSEFFICIENCY GAINS Rig efficiency Location high-grading Wellbore + completion designSERVICE COSTS Rig rates Directional drilling Stimulation Liner packer system ESPsMULTILATERAL EXPANSION 40% multilaterals 85% of the cost of single laterals for 100% of 90-day type curve production$250K of $600K Targeted Savings Realized as of March 201515SandRidgeEnergy.com15 At a target lateral cost of $2.4MM and 2015 type curve, wells generate ~45% IRRs at recent strip, hedges excluded Returns for these new costs and type curve are comparable to returns from 2014 program ($3MM lateral cost, 2014 type curve, $80+ oil) Well cost reductions and type curve improvement offset impact of lower oil prices; set foundation for enhanced returns with price improvementNEW COSTS AND EURs PRESERVE PRIOR RETURNS* 02.13.15 Strip Pricing 27% More EUR for 80% of the Cost16SandRidgeEnergy.com16MISS CHESTER WOODFORD*Producing Laterals 1,375 37 5Peak 30-Day Boe 365 361 418Future Locations (a)3,212 401 147DRILLING LOCATION INFORMATIONMULTI-ZONE DRILLING LOCATIONS AND 2015 ACTIVITY( As of February 2015) * Wells developed under new geological model(a) PUDs + Risked Probables @ 02.13.15 StripRamp Down to 6 Development Rigs + 1 Committed to Appraisal New Ventures17SandRidgeEnergy.com17ACTIVITY AND SUCCESS IN 2014 Sole multilateral operator in the Midcontinent Multilateral program consisted of 28 projects with average completed well costs of $2.6MM per lateral Wells with greater than three months of production averaged 100% of the 90-day type curve Boe 98% of 90-day type curve oil 102% of 90-day type curve gasINNOVATION IS MAKING SANDRIDGE AN INDUSTRY LEADER100% of 90-Day Type Curve Production for 85% of the Cost of a Single LateralFULL SECTION DEVELOPMENT DRIVING CAPITAL EFFICIENCY Two or more laterals from a single vertical wellbore create significant cost reductions, yielding enhanced returns Rock integrity of our carbonates (vs shales or sandstones elsewhere) allows for effective use of open hole completions Shared pad drilling operations drive reductions in location, day rate, rig mobilization, & facility costsCAPITALIZING ON PROVEN INNOVATION IN 2015 40% Multilaterals in 2015 drilling plan Efficient allocation of capital Proven results Expanding an innovative concept throughout our focused areas of development 18SandRidgeEnergy.com18 Appraisal / New Ventures is a critical piece of SD business Material success in Chester & Woodford Focused on redevelopment of additional legacy vertical reservoirs and technology transfer of SD expertise from existing to new areas $46MM CAPEX budget in 2015 (of $700MM total) in D&C, land, and geophysical Arkoma Shelf Central Kansas Uplift (Miss HZ, Viola, & Arbuckle) Southern Anadarko (Latigo and Chester Targets) Other recompletions and legacy acreage appraisalAPPRAISAL/NEW VENTURESLarge Midcontinent Fairway for Appraisal19SandRidgeEnergy.com19HZ APPRAISAL SUCCESS First industry horizontal re-development of legacy Chester vertical production Fine grained silty sandstone, distinct pay intervals separated by shale Existing infrastructure in area Higher oil cut and less water production than Miss carbonates Shallow decline profile Growth potential with appraisal success to the south and west of focus area counties 230-270 MBoe EUR per well Program: 37 wells @ 361 Boe/d 30-day IP (63% oil), 3% above new Miss Type Curve 10 Wells currently completing NEW VENTURES SUCCESS CASEPioneering Chester Oil DevelopmentLEGACY CHESTER VERTICAL PRODUCTION FOCUS AREA20SandRidgeEnergy.com20 Woodford targets now identified based on four desirable characteristics: Production interval above Woodford (example: Mississippian) Siliceous Woodford member with moveable oil Productive interval below Woodford (example: Hunton or Misener) Underlying frac barrier separating the Woodford from wet intervals below (example: Sylvan) 250-275 MBoe EUR per well ~100 feet of targeted gross thickness 5 Wells @ 418 Boe/d 30-day IP (79% Oil), 19% above new Miss Type Curve 2 Wells currently completing GEOLOGICAL EXPERTISE UNLOCKS WOODFORDRefined Geological Model Yielding Strong ResultsFigure adapted from Amsden and Klapper (1972)21SandRidgeEnergy.com21PRODUCE ~1.3 million barrels of water gathered and disposed per day during Q414 in the Mid-Continent and Permian BasinGATHER & PROCESS Produced water is transported to disposal location through SD owned pipeline system Typically Polyethylene pipe (8 to 12 diameter) connected to producing wells, buried under ground Water is treated at disposal locationINJECT 191 SWG wells in Mid-Continent and Permian Basin Many take water on a vacuum (hydrostatic pressure is adequate to achieve disposal) Average capacity of 15,000 Bw/d per well Low pressure pumps at most locations Various tubing sizes based on needed capacity Open hole Arbuckle completion Pressure and volume continuously monitored Arbuckle has been taking produced water for ~80 years Frac flowback is < 5% of total Gathering system is interconnected maximizing system flexibilitySALTWATER GATHERING & DISPOSAL (SWG)99%OF WATERIS PIPED (VS.TRUCKED)Most Efficient SWG Operator in the Mid-Continent~$600MM INVESTED THROUGH 201422SandRidgeEnergy.com22Note: Map does not show other SWG assets in NW Kansas or West Texas. LARGEST SALTWATER GATHERING SYSTEM IN THE NATION 1,260 MBw/d current volumes 191 SWG wells 1,049 miles of installed pipelines Advanced hydraulic simulation Resembles hydrocarbon gathering and processing system Design based on actual type curves Engineered design and construction New assets, built since 2008100 MILES99% of Water is Piped vs. Trucked23Change look24SandRidgeEnergy.com242015 PRODUCTION GUIDANCE(a) 2014: 1.3 MMBoe of non-recurring production related to divested GOM assetsNote: Totals may not foot due to rounding 25SandRidgeEnergy.com25(a) Convertible at holders option at $8.0125 per common share; convertible after Feb 20, 2014 (b) Convertible at holders option at $7.7645 per common share; convertible after Nov 20, 2015Senior Notes ($ in millions)Credit Rating Corp RatingOutlookPreferred Stock ($ in millions)8.5% Convertible Perpetual Preferred (a)$2657.0% Convertible Perpetual Preferred(b)300Total $565MoodysB1StableS&P BNegativeCredit RatingCorp RatingOutlook CAPITAL STRUCTURE OVERVIEW(c) $100MM drawn as of February 20, 20158.75% Sr Notes due 2020 $4507.5% Sr Notes due 2021 1,1758.125% Sr Notes due 2022 7507.5% Sr Notes due 2023 825Total $3,20026SandRidgeEnergy.com26 As of 02/25/2015 Hedge positions include contracts that have been novated to or the benefit of which have been conveyed to SandRidge sponsored royalty trustsHEDGING OVERVIEWLIQUIDS Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 2016SwapsVolumes (MMBbls) 2.29 1.73 1.01 0.55 5.59 1.46Price($/Bbl) $92.71 $91.55 $92.43 $94.11 $92.44 $88.36Three-way CollarsVolumes (MMBbls)0.72 0.73 1.56 1.56 4.58 2.56Call Price ($/Bbl)$103.13 $103.13 $103.65 $103.65 $103.48 $100.85Put Price ($/Bbl)$90.82$90.82$90.03 $90.03 $90.28 $90.00Short Put Price ($/Bbl)$73.13 $73.13 $78.15 $78.15 $76.56 $83.14NATURAL GASQ1 2015 Q2 2015 Q3 2015 Q4 2015 2015 2016SwapsVolumes (Bcf) 14.40 1.82 1.84 1.84 19.90 0.00Price ($/Mcf) $4.62 $4.20 $4.20 $4.20 $4.51 NACollarsVolumes (Bcf) 0.25 0.25 0.25 0.25 1.01 0.00Call Price ($/Mcf) $8.55 $8.55 $8.55 $8.55 $8.55 NAPut Price ($/Mcf) $4.00 $4.00 $4.00 $4.00 $4.00 NABasis Swaps (PEPL)Volumes (Bcf) 9.65 15.47 15.64 15.64 56.40 0.00Swap Price ($/Mcf) ($0.291) ($0.302) ($0.302) ($0.302) ($0.300) NA27SandRidgeEnergy.com272014 YEAR END RESERVESCreating Value from a Strong Reserve Base SEC Pricing $91.48 / $4.35 RESERVES PV10LIQUIDS MMBblsGAS BcfEQUIVALENT MMBoe% $MM %Reserves by Reservoir StatusPDP Producing119 1,011 287 56%$ 3,52364%PNP Non Producing 15 117 35 7% 462 8%PBP Behind Pipe 2 76 14 2% 94 2%PUD Undeveloped 82 585 179 35% 1,437 26%Total 218 1,788 516 $ 5,516Reserves by DevelopmentTotal Developed136 1,203 336 65%$ 4,07974%Total Undeveloped 82 585 179 35% 1,437 26%Total 218 1,788 516 $ 5,516Note: Totals may not foot due to rounding RESERVES PV-1028SandRidgeEnergy.com28PRODUCTIONOil (MMBbls)9.0 10.0Natural Gas Liquids (MMBbls) 4.0 5.0Total Liquids (MMBbls) 13.0 15.0Natural Gas (Bcf) 89.5 93.5Total (MMBoe) 28.0 30.5CAPITAL EXPENDITURES($ in millions)Exploration and Production $612Land and Geophysical 38Total Exploration and Production $650Oil Field Services 5Electrical/Midstream 30General Corporate 15Total Capital Expenditures(excl. A&D) $700EBITDA from Oilfield Servicesand Other ($MM)(a)$10 Adjusted Net Income Attributable to NCI ($MM)(b)$60 Adjusted EBITDAAttributable to NCI ($MM)(c)$90 PRICE REALIZATIONSOil (differential below WTI) $3.75NGLs (realized % of WTI) 30%Gas(differential below Henry Hub) $0.75COSTS PER BOELifting $12.25 - $13.00Production Taxes 0.65 0.85DD&A oil & gas 12.00 15.00DD&A other 2.00 2.20Total DD&A $14.00 - $17.20G&A cash 3.00 3.50G&A stock 0.50 0.75Total G&A $3.50 - $4.25Corporate Tax Rate 0%Deferral Rate 0%a) EBITDA from Oilfield Services and Other is a non-GAAP financial measure as it excludes from net income interest expense, income tax expense and depreciation, depletion and amortization. The most directly comparable GAAP measure for EBITDA from Oilfield Services and Other is Net Income from Oilfield Services and Other. Information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast the excluded items for future periods and/or does not forecast the excluded items on a segment basis.b) Adjusted Net Income Attributable to Noncontrolling Interest is a non-GAAP financial measure as it excludes gain or loss due to changes in fair value of derivative contracts and gain or loss on sale of assets. The most directly comparable GAAP measure for Adjusted Net Income Attributable to Noncontrolling Interest is Net Income Attributable to Noncontrolling Interest. Information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast the excluded items for future periods.c) Adjusted EBITDA Attributable to Noncontrolling Interest is a non-GAAP financial measure as it excludes from net income interest expense, income tax expense and depreciation, depletion and amortization, gain or loss due to changes in fair value of derivative contracts and gain or loss on sale of assets. The most directly comparable GAAP measure for Adjusted EBITDA Attributable to Noncontrolling Interest is Net Income Attributable to Noncontrolling Interest. Information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast the excluded items for future periods.www.SandRidgeEnergy.com 282015 OPERATIONAL GUIDANCE 29SandRidgeEnergy.com292015 CAPEX GUIDANCE2015 CAPEX GUIDANCE 2015 GUIDANCE LATERAL COUNTS 2015 GROSS 2015 NETDevelopment D&C $306 Development 182 116Appraisal & New Ventures D&C 29Appraisal & New Ventures 11 8Carryover 102 Total Laterals 193 124Total D&C $437SWG - D&C 11Permian 0JV Carry 0Total D&C $448OTHER E&PDevelopment Land & Geophysical $21Appraisal & New Ventures Land & Geophysical17Total Land & Geophysical 38SWG Infrastructure 27Workovers & Non-Op 86Capitalized G&A and Interest 51Total Other E&P $202NON E&PDrilling & Oil Field Services $5Midstream and Electrical 30General Corporate 15Total Non-E&P $50TOTAL $70030SandRidgeEnergy.com30SANDRIDGE INVESTOR RELATIONS123 Robert S. Kerr Avenue, Oklahoma City, OK [email protected] Mission at SandRidge is to create the premier, high-return, growth-oriented, resource conversion company, focused in the Midcontinent region of the United States.