How SandRidge Energy Inc. Is Doing the Little Things to Improve Returnshttp://www.fool.com/investing/general/2014/04/17/how-sandridge-energy-inc-is-doing-the-little-thing.aspx Matt DiLallo
April 17, 2014
I don't think investors realize how focused SandRidge Energy (NYSE: SD) is on improving shareholder returns. It's the little things really, but these little things add up to big savings.
Expensive paint job
The company decided that this was not an investment that was creating any value for investors so the company is no longer painting those tank batteries. For perspective, that's enough of a savings to actually fund two additional Mississippian wells each year. This and a whole host of other improvements is enabling SandRidge Energy to improve its rate of return for each well it drills, which is real good news for shareholders.
SandRidge Energy is seeing similar results in the Midcontinent. Last year the company drilled about 40% of its wells utilizing multi-well pads, which saved the company $25 million. This year the company's plan is to drill 70% of its wells on pads, which is expected to save the company $65 million. One of the biggest savings in this shift is found in sharing well-site facilities like the tank batteries as well as separation equipment. For example, moving from a single well facility to a four well share facility enables SandRidge to reduce its well facility costs from $540,000 per well to just $170,000 per well.
As the following slide shows, SandRidge Energy's shift to multi-well pads and shared facilities is able to generate significant savings over its competitors due to its focus on costs.