SandRidge Energy Inc

SandRidge Energy, Inc. (NYSE: SD) is an independent oil and natural gas company that is focused on the acquisition and development of oil and gas properties. The Company’s primary areas of operation are the Mid-Continent region in Oklahoma and Kansas. The Company holds interests in over 1,471 gross producing wells, approximately 992 of which it operates, and approximately 551,000 gross total acres under lease located primarily in Oklahoma and Kansas. Its productive wells consist of wells that are producing hydrocarbons.

Recent Financial and Business Updates:

Recent Highlights: The Company announced a cash dividend of USD 0.10 per share, payable on November 27, 2023, to shareholders of record on November 13, 2023. In the third quarter, net income amounted to USD 18.7 million, or USD 0.51 per basic share, while adjusted net income was USD 16.2 million, or USD 0.44 per basic share. The same period saw adjusted EBITDA of USD 22.6 million. Net cash provided by operating activities was USD 25.5 million, with free cash flow reaching USD 24.2 million. Interest income for the quarter was approximately USD 2.5 million. General and administrative expense (G&A) for Q3 was USD 2.6 million, or USD 1.65 per Boe, and adjusted G&A was approximately USD 2.1 million, or USD 1.35 per Boe. 

Financial Results & Update

• Profitability & Realized Pricing: For the third quarter, the Company reported net income of USD 18.7 million and net cash provided by operating activities of USD 25.5 million. Adjusted net income was USD 16.2 million, adjusted operating cash flow totaled USD 25.0 million, and adjusted EBITDA was USD 22.6 million. The Company generated approximately USD 24.2 million and USD 63.6 million of free cash flow for the three and nine-month periods ended September 30, 2023, with a conversion rate of over 85% relative to adjusted EBITDA. Third quarter realized prices, before derivatives impact, were USD 79.83 per Bbl for oil, USD 1.36 per Mcf for natural gas, and USD 21.89 per Bbl for natural gas liquids. For the nine months ended September 30, 2023, these prices were USD 73.88 per Bbl, USD 1.78 per Mcf, and USD 20.77 per Bbl, respectively.
• Operating Costs: In Q3 2023, lease operating expense (LOE) was USD 11.5 million or USD 7.22 per Boe. General and administrative expense (G&A) for the same period was USD 2.6 million, or USD 1.65 per Boe, and adjusted G&A was USD 2.1 million, or USD 1.35 per Boe.
• Liquidity and Capital Structure: As of September 30, 2023, the Company held USD 232.2 million in cash and cash equivalents, with no outstanding term or revolving debt obligations.
• Dividend Program: On November 2, 2023, the Board of Directors declared a USD 0.10 per share cash dividend, consistent with the ongoing cash dividend program. A one-time cash dividend of USD 2.00 per share was paid on June 7, 2023. 

Operational Results & Update

• Production: Production for Q3 2023 totaled 1,586 MBoe, with 17.2 MBoed, 17% oil, 55% natural gas, and 28% NGLs.
• Development Program: The Company benefited from its capital development program, concluding in Q2 2023. Recently drilled wells targeting the Meramec formation increased oil production by about 20% in the first nine months of 2023 compared to the same period in 2022.
• Base Production Declines: During the first nine months of 2023, the Company completed 12 artificial lift conversions, contributing to lowering the expected annual base PDP decline to an average of ~8% over the next ten years.
• Outlook: The focus remains on growing cash value and generation capability, with a disciplined approach to capital allocation for high-return projects. Near-term efforts include artificial lift conversions, cost-effective workovers, and limited well reactivations. The Company will monitor factors influencing returns, shaping disciplined development decisions in 2023 and beyond. 

Technical Observation (on the daily chart)

The stock is falling since its Q3FY23 Earnings release and has corrected by around 16.72% since then. The Relative Strength Index (RSI) over a 14-day period stands at 42.05, currently near the oversold zone, with expectations of a short-term upside momentum or some consolidation. Additionally, the stock's current positioning is below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term resistance levels. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given SandRidge Energy, Inc. (NYSE: SD) at its closing price of USD 13.66 as on December 13, 2023.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is December 13, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.