An investment in SandRidge Energy (NYSE: SD) has the potential to pay off big time if everything falls into place. The company has a massive opportunity to grow its oil production thanks to its industry-leading position in the Mississippi Lime formation. While a bulk of the company's portfolio has shifted to that play, there's more to the story.

Because of all the changes in its portfolio over the past year, I recently updated our premium report on the company. Even with those changes now in the books, SandRidge isn't done with its repositioning plan, so investors need to keep a close eye on this company. The following is an excerpt from that updated report, which focuses on the portfolio of opportunities that SandRidge already has in place. It's just a sample of one section, but we hope you enjoy.

Portfolio:

Mississippian
Investing in SandRidge is believing in its ambitious plan to turn the Mississippian Lime into a black gold mine. The company has 1.85 million net acres in the Mississippian and has already drilled around 700 horizontal wells. It sees more than 11,000 potential drilling locations giving it an 18-year inventory. The company is far and away the top operator in the play; it's currently running 32 rigs which is two times the next highest operator. As you can see in the map below, SandRidge still has plenty of room to grow, especially Kansas.

Part of SandRidge's development of the Mississippian has been laying the infrastructure necessary to ramp up production. The company has developed an extensive saltwater disposal and transportation system as well as its own electric grid to quickly ramp up production while keeping costs down. These investments are yielding a cost advantage that will begin to show up on SandRidge's bottom line as more oil flows out of the play.

One problem is that the play isn't as oily as SandRidge had first thought. The production mix currently runs 45% oil and natural gas liquids and 55% natural gas. While the oil content isn't as high as the Bakken or the Eagle Ford, it's cheaper to develop, meaning high rates of return are possible. The key here is that the depth and permeable carbonate reservoirs of the Mississippian allow for quick production and decreased costs. SandRidge has its well cost down to about $3 million per well, which is about a third of what it costs to drill in the Bakken. Couple the fact that cheaper low-horsepower rigs are sufficient to produce in this area with increased efficiency as the company advances its technique, and it means production has increased significantly. Over the past year production has risen 131% and it's up 18-fold since the third quarter of 2010.

Gulf of Mexico
SandRidge has been building out its shallow Gulf of Mexico operations as a cash flow asset to help fund its development of the Mississippian. The company supercharged these operations through the purchase of Dynamic Offshore Resources last year and it added a small bolt-on acquisition shortly thereafter. The company plans to spend about $200 million this year to keep its Gulf production relatively steady and to operate it for maximum cash flow. SandRidge plans to seek out additional bolt-on acquisitions with low-risk upside focused around obtaining known production and reserves. The company projects 2013 production of 28,000 barrels of oil equivalent per day, down from nearly 32,000 barrels of oil per day in the fourth quarter. However, the decline is due to adjustments for hurricanes and operational risking.

West Texas Overthrust
SandRidge still has legacy assets in the West Texas Overthrust. While the company is currently not devoting any capital to the asset, it does represent potential value if natural gas prices rise. However, the asset is currently a liability to the company as it signed a 30-year deal with Occidental Petroleum (OXY 0.58%) to supply natural gas to its CO2 treatment plant. If SandRidge doesn't supply the contracted volumes then it's responsible to compensate Occidental for the difference. Given current production levels, the company anticipates to accrue a shortfall of more than $30 million this year.