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SANDRIDGE ENERGY INC Reports Operating Results (10-K)

February 27, 2012 | About:
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10qk

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SANDRIDGE ENERGY INC (SD) filed Annual Report for the period ended 2011-12-31.

Sandridge Enrgy has a market cap of $3.63 billion; its shares were traded at around $8.81 with a P/E ratio of 293.67 and P/S ratio of 2.57.

Highlight of Business Operations:

For the year ended December 31, 2010, the Company had income from operations of $88.4 million in its exploration and production segment compared to a loss from operations of $1,487.9 million in 2009. The $320.1 million increase in oil and natural gas revenues and the absence of a full cost pool ceiling impairment were partially offset by the $50.9 million net loss on commodity derivative contracts, a $68.0 million increase in production expenses, a $25.2 million increase in production taxes and a $99.3 million increase in depreciation and depletion on oil and natural gas properties. See discussion of production expense, production taxes and depreciation and depletion under Consolidated Results of Operations below.

Drilling and oil field services segment revenues increased $74.7 million to $103.3 million in the year ended December 31, 2011 from the year ended December 31, 2010 and drilling and oil field services segment expenses increased $54.4 million during the same period to $93.0 million. The increase in revenues and expenses was primarily attributable to an increase in the number of rigs working for third parties and an increase in oil field services performed for third parties during 2011. During 2011, an average of ten rigs were working for third parties compared to an average of four rigs working for third parties during 2010. Additionally, the average daily rate received per rig working for third parties increased to $15,215 during 2011 compared to $14,287 during 2010. The increases in rigs working for third parties and the average daily rate received from third parties resulted in income from operations of $10.3 million in the year ended December 31, 2011 compared to a loss from operations of $10.0 million in 2010.

Drilling and oil field services segment revenues increased to $28.6 million in the year ended December 31, 2010 from $23.6 million in the year ended December 31, 2009 and drilling and oil field services segment expenses decreased $0.2 million to $38.5 million during the same period. The increase in revenues was primarily attributable to an increase in the number of rigs working for third parties during 2010. During 2010, an average of four rigs were working for third parties compared to an average of one rig working for third parties during 2009. Additionally, the average daily rate received per rig working for third parties increased to $14,287 during 2010 compared to $11,398 during 2009. Reduced, or stand-by, rates received on two of the Companys rigs during 2009 resulted in a lower average rate per rig per working day in 2009. During 2010, none of the Companys rigs received stand-by rates. The increase in the number of rigs working for third parties and the average daily rate received from third parties resulted in a reduced loss from operations of $10.0 million in the year ended December 31, 2010 compared to $15.2 million in 2009.

Midstream gas services segment revenues for the year ended December 31, 2010 were $98.5 million compared to $83.9 million in the same period in 2009. Income from operations was $4.0 million for the year ended December 31, 2010 compared to a loss from operations of $37.0 million in 2009. An increase in natural gas prices for third-party volumes the Company marketed in the year ended December 31, 2010 compared to 2009 contributed to the increase in revenues. The consolidation of GRLP activity into the midstream gas services segment for the year ended December 31, 2010 also contributed to the increase in midstream gas services segment revenues and to the increase in income from operations. Prior to October 1, 2009 when the Company began consolidating GRLP, its share of GRLP activity was reported as income from equity investments. The 2010 increase in income from operations was primarily due to the inclusion of a $26.1 million loss on the sale of the Companys gathering and compression assets and a $10.0 million impairment on its spare parts inventory in the year ended December 31, 2009.

Total oil and natural gas revenues increased $320.1 million for the year ended December 31, 2010 compared to 2009, primarily as a result of increased oil production, offset slightly by decreased natural gas production, and increased prices received for the Companys oil and natural gas production. The increase in oil production was primarily due to the addition of properties acquired from Forest in late 2009 and Arena in mid-2010 and a focus on increased oil drilling in 2010. The average price received for oil production, excluding the impact of derivative contracts, increased 20.3% in 2010 to $66.89 per Bbl from $55.62 in 2009. The average price received for natural gas production, excluding the impact of derivative contracts, increased 9.5% in 2010 to $3.68 per Mcf from $3.36 in 2009.

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