In this video, Motley Fool energy analyst Joel South describes his three reasons for buying SandRidge Energy (NYSE:SD). First, the Mississippian Lime play is cheap to explore and produce -- drilling costs are roughly a third of drilling costs in the Bakken Shale play. SandRidge has also invested in its own saltwater disposal systems, further reducing its costs. Second, the sale of Permian Basin assets both reduced costs and raised sufficient capital to aggressively drill in the Mississippian Lime play through 2014. Third, even though the Mississippian Lime is a bit more gas heavy than originally thought, some oil-heavy finds have been made. Natural gas prices have also come off their 2012 lows, and that helps the value of SandRidge's assets.
Joel South owns shares of SandRidge Energy. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.