Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



What's the Opportunity at SandRidge Energy?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

SandRidge Energy (UNKNOWN: SD.DL  ) is emerging as one of the more intriguing oil and gas producers in the nation. It has basically sold everything it owned in order to concentrate on one big opportunity. Now, its building the company around the oil coming from the Mississippi Lime formation. 

When I describe SandRidge as intriguing, I do so for good reason. You have boardroom drama with an embattled CEO, tremendous liquids growth opportunities, and a company that's selling for a compelling discount to its net asset value. The parallels to Chesapeake Energy are rather striking, and the opportunity is as good, if not better, due to the higher ratio of liquids to gas production. 

The company has undergone a lot of changes over the past year. That's why I recently updated a premium report on the company. With so many changes, and more on the way, this is a company that investors need to keep close tabs on.  

Following is an excerpt from the report, laying out the company's opportunity. We hope you enjoy it.

The Opportunity

Like the natural gas assets in 2007, SandRidge is putting the company's future in one basket: 1.85 million net acres in the Mississippian oil play in northern Oklahoma and western Kansas. The company's strategy is to use the cash generated from asset sales and its Gulf of Mexico operations to develop its Mississippian assets.

The Mississippian play holds the keys to SandRidge's growth strategy. The company plans to aggressively grow production while simultaneously striving to improve its rate of return. This growth comes at a high cost, as the company recently sold its Permian Basin assets to fund its Mississippian growth plan through the end of 2014. While the company has multiple options to fund its plan beyond 2015, it will require billions in future capital to fully develop the play.

For oil and gas juniors, strong balance sheets and access to capital are essential as one down cycle can render a company inoperable. The sale of the Permian Basin assets sliced the company's leverage ratio in half (to two times), and boosted its liquidity to $2.4 billion. That went a long way to improving its liquidity picture as the company has no near-term debt maturities.

However, the company is still a long way from being self-funded. Last year SandRidge grew its EBITDA to $1.07 billion, though that number is just $748 million pro forma for acquisitions and divestitures. The Permian Basin sale was a setback in a sense -- the company still sits well short of its $2 billion EBITDA goal. However, if SandRidge can continue to cut costs and execute its Mississippian plan, it could develop into a long-term winner.

That's just a small portion of the story for the company that, in my opinion, has a future that looks optimistic. If you are unsure about the future of this emerging oil and gas junior, and are looking to find out more about its strengths and weaknesses, then check out The Motley Fool's premium research report detailing SandRidge's game plan and what to expect from the company going forward. To get started, simply click here now!

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 20, 2013, at 8:34 AM, mrconnors0531 wrote:

    SD is going to report earning's May 5th. I would not like to be shorting this stock once it starts to rebound. If you like it and can take the risk I believe now is the time to move. I owned CHKP in 93 when it took off and OSK in 2009 when it flew. It was fun to see greens dollar plus moves everyday for a week or more. Thats what I believe could happen if Tom Ward is right about If he can make a 1.85 million acre dream come true he will be the next T Boone oil man. As a share holder I believe in him but I started buying at $7 and have continued all the way down to here, I am prepared to lose every thing I'm a gambler with a small position of my Roth but it is fun to hit big on penney stocks tax free.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2374708, ~/Articles/ArticleHandler.aspx, 9/26/2016 3:38:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,106.92 -154.53 -0.85%
S&P 500 2,148.92 -15.77 -0.73%
NASD 5,260.84 -44.91 -0.85%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
SD.DL $0.00 Down +0.00 +0.00%
SandRidge Energy CAPS Rating: ***