SandRidge Energy, Inc. (the “Company” or “SandRidge”) (NYSE: SD) announced the entry into a definitive agreement to acquire certain producing assets and leasehold interests in the Cherokee play of the Western Anadarko Basin for cash consideration of $144 million, before customary purchase price adjustments. The Company also entered into a Joint Development Agreement (“JDA”) governing its participation in the future development of certain of the acquired leasehold interests.
Acquisition Highlights
- Net production of ~6 MBoed (~40% oil) focused in Ellis and Roger Mills Counties, Oklahoma
- Includes 42 producing wells in addition to 4 drilled uncompleted (“DUC”) wells scheduled to be turned to production in 2024
- Immediately accretive to key metrics, including production, EBITDA, and free cash flow
- Oily PDP production and new development is projected to meaningfully increase SandRidge’s EBITDA and cash flow on a pro forma basis, all while maintaining its planned quarterly dividend
- Leasehold interest in 11 drilling spacing units (“DSUs”), which add inventory of up to 22 two-mile lateral wells in the highly productive core of the Cherokee play
- Joint development of DSUs with a partner who has a demonstrable history of successful operations in the Cherokee play
- SandRidge will assume operatorship of new wells after they are producing
- Acquisition assets are located within the Mid-Continent region, where SandRidge currently operates. Additionally, the assets are in the vicinity of the Company’s ongoing leasing program, providing further optionality for future SandRidge-operated drilling projects
- July 1, 2024 effective date with anticipated closing in the third quarter 2024. SandRidge plans to fund the transaction with cash on hand
Grayson Pranin, SandRidge’s President & Chief Executive Officer, commented on the acquisition:
“We’re excited to expand our footprint in the Mid-Continent by upgrading our inventory through the Cherokee Shale play in the Western Anadarko Basin. These assets bolster our base production and cash flow profile by immediately adding higher oil content while providing access to a successful drilling campaign through joint development of the assets. We’re looking forward to participating in new high-return drilling and completion projects and taking over operatorship of the new wells, allowing us to apply SandRidge’s low-cost lease operating expertise to the new assets.
This transaction allows us to boost future production and cash flow levels, while preserving our strong balance sheet and planned capital return program. The undeveloped assets are focused in a proven and highly productive area in Roger Mills County, Oklahoma and are self-funding on a standalone basis.
Finally, the acquired producing assets and DSUs flange up with areas where we’ve been recently investigating the potential for new SandRidge-operated drilling opportunities. As we operate and jointly develop the acquired assets, our team will be well positioned to evaluate and execute on future organic growth opportunities.”
Legal Advisor
Winston & Strawn LLP is serving as SandRidge’s legal advisor for the transaction.
