After deciding to shift the company's focus away from natural gas production, SandRidge Energy (NYSE: SD) stated that its three-year plan was to use its Permian Basin assets to generate cash flows that would be used to fund the exploration and production of the Mississippian Lime. But the company decided instead to sell off its Permian assets, and use the proceeds to pay down debt and expedite its production schedule in the Mississippian. In this video, Motley Fool energy analyst Joel South tells us why he doesn't like the move. It leaves the company concentrated solely in the Mississippian, where SandRidge has been striking more natural gas than oil, which is something investors don't like to see at the moment. In addition, he looks at Chesapeake Energy (CHK +0.00%), which is taking a more cautious approach to the Mississippian, one that will employ capital more efficiently.
Why concentrating in its Mississippian assets alone may be a risky move for SandRidge.
About the Author
Joel is a University of Washington graduate and covers energy and materials for The Motley Fool. Be sure to follow The Motley Fool's energy and materials Twitter for all your energy and materials coverage.
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