Why the Sudden Drop at SandRidge?

Why did SandRidge take a hit?

Joel South
Joel South
Feb 4, 2013 at 3:41PM
Energy, Materials, and Utilities

SandRidge Energy (UNKNOWN:SD.DL) is down significantly for the second straight trading day as investors continue to flee after disappointing results from the SandRidge Mississippian Trusts on Friday. After divesting its liquids-heavy Permian Basin assets, SandRidge is fully reliant on increasing its oil production by developing its Mississippian Lime assets.  

SandRidge has the vast majority of its 600-plus horizontal wells drilled in close proximity to both Mississippian Trusts' wells. With oil production in decline, and more natural gas production causing both trusts to miss distribution per unit targets significantly, SandRidge is set for another disappointing fourth quarter. The haircut it received the past two days can be attributed to the market pricing the lower oil content into the share price. Most of the Mississippian activity is located in Alfalfa and Grant Counties in Oklahoma, so SandRidge still has plenty of options and drilling locations to maintain a healthy rate of return over the long term. Check out the video below for more information on why SandRidge plummeted.