SandRidge Energy (NYSE:SD) will release its quarterly report on Tuesday, and investors have bid up the oil-and-gas producer's shares in recent months in hopes of better results. Yet even as the much larger Chesapeake Energy (NYSE:CHK) and Devon Energy (NYSE:DVN) have retrenched to adjust to the ever-changing dynamics between dry natural gas and oil-and-liquids prices, SandRidge earnings will depend on its ability to navigate the same issues successfully.

SandRidge has been a controversial stock, with its aggressive expansion plans having proved ill-timed as the bottom fell out of the natural-gas market in recent years. The removal of former CEO Tom Ward also spooked many investors, amid allegations of improper transactions involving related parties that were eerily reminiscent of the same charges that led to former Chesapeake CEO Aubrey McClendon's departure. As natural gas prices start to climb, though, can new CEO Jim Bennett take full advantage? Let's take an early look at what's been happening with SandRidge Energy over the past quarter and what we're likely to see in its report.

Stats on SandRidge Energy

Analyst EPS Estimate

$0.03

Change From Year-Ago EPS

(40%)

Revenue Estimate

$465.69 million

Change From Year-Ago Revenue

(12.6%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can SandRidge earnings keep rising this quarter?
In recent months, analysts have gotten a lot more optimistic about SandRidge earnings, reversing calls for a $0.03-per-share loss in the third quarter and boost their full-year 2013 projections by $0.02 per share. The stock has also climbed in response, rising 15% since early August.

SandRidge gave investors mixed feelings coming into the quarter, with its second-quarter earnings report reassuring shareholders but also raising questions. The company managed to turn a surprise profit for the quarter, riding substantial cost reductions and boosting guidance for expected production. Yet SandRidge faces a longer-term funding gap that has some analysts worried about whether the company can execute on its ambitious growth plans. Unlike Chesapeake, SandRidge hasn't really pulled back on its capital-expenditure plans, instead preferring to try to take maximum advantage of its opportunities while they're available.

In the past, SandRidge might have tried to close that funding gap by offering royalty-trust shares of certain high-potential assets. Yet the poor performance of SandRidge Permian Trust (NYSE:PER) and similar trusts covering the company's Mississippi Lime assets could leave investors unwilling to commit more capital to future SandRidge royalty-trust offerings.

But SandRidge is still trying to make the most of its production opportunities. The company is working with Devon Energy to test the Mississippian-related Woodford area to see if it can match Devon's past success with its own acreage. That has led some to believe that Devon might buy out SandRidge, but given Devon's substantial portfolio of existing high-growth prospects, it arguably doesn't really need a big asset purchase in order to bolster its growth further.

In the SandRidge earnings report, look closely to see whether the company can bring its leverage ratio down despite its continued spending on capital projects. The debt threat is the big thing holding SandRidge shares back now, so any solution to that long-range problem could help the company stand up well against Chesapeake Energy and Devon Energy.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.