SandRidge Energy, Inc. Q3 FY2025 earnings call

• Grayson Pranin highlighted a positive quarter with production growth and revenue/EBITDA increases. - Jonathan Frates detailed financial results: revenue of $40M (+32% Y/Y), adjusted EBITDA $27.3M (+54% Y/Y), cash position of $103M, dividend details, and commodity price realizations. - Dean Parrish discussed the Cherokee drilling program: 3 wells brought online in Q3, 5th and 6th wells in completion, first 4 operated wells had an avg peak 30-day production rate of ~2,000 Boe/day (43% oil). 2025 capital program: $66M - $85M planned, with $47M - $63M for drilling/completions and $19M - $22M for workovers/leasing. Legacy assets 99% held by production. - Grayson outlined strategy: maximize Mid-Con assets, capital stewardship, M&A optionality, capital return program, and ESG commitment. - Brandon Brown mentioned adjusted G&A of $2.1M, an efficient organization with total personnel of just over 100 people.

Third quarter production averaged approximately 19 MBoe per day, with a Boe basis increase of approximately 12% and oil increase of 49%. Revenue saw a roughly 32% increase and adjusted EBITDA had a 54% increase compared to the same period last year. Revenues for the quarter were approximately $40 million, representing a 32% increase year-over-year. Adjusted EBITDA was $27.3 million in the quarter versus $17.7 million in the prior year period. Commodity price realizations for the quarter before hedges were $65.23 per barrel of oil, $1.71 per Mcf of gas, and $15.61 per barrel of NGLs. Production is meaningfully hedged through the fourth quarter with swaps and collars making up approximately 35% of fourth quarter production, including 55% of natural gas production and 30% of oil.

• Anticipate growing oilier production volumes further with 2 more wells to sales in 2025 and 2 completions carrying over to 2026. - 2025 capital program budgeted between $66M - $85M. - Production hedged ~35% in the fourth quarter. - Hopeful about 24,000 net acres in the Cherokee play for a multiyear runway.

• Commodity price volatility. - Changes in well costs. - Macroeconomic factors. - Competitive landscape in M&A opportunities.

Q: Congratulations on a great quarter and what looks like a fantastic purchase in Cherokee. Can you talk a little bit more about M&A activity in the Cherokee opportunities for you guys, M&A opportunities overall? And maybe discuss a little bit more about how a year later after having bought these assets, how you can evaluate the success of that purchase?

A: Sure, David, it's great to hear from you and a great series of questions. I'm going to try to tackle from the top if I missed something, please let me know. I think M&A opportunities in the Cherokee exist, although it's a very competitive landscape. So we continue to keep our eyes wide open. I think those opportunities are right now predominantly leasehold or acreage related because a lot of the PDP is new and building, so there's not that sustained level of PDP-based cash flow like you'll get in more aged assets. And that could change over time as further development occurs in the play. I think within the overall Mid-Con, the M&A landscape is healthy. There's been a number of deals announced within Mid-Con overall within the last several weeks. We continue to look at a lot of these and look for opportunities that could have synergies, whether that's in the Cherokee play or within our legacy assets or areas that we could apply our low-cost know-how where there's incremental margin that can be added through our own skill sets and through our structure, right? Because we have this 24-hour, 7-day a week man operations center that allows us to operate very cost effectively. And from a back-office perspective, we can add assets very efficiently without really increasing G&A materially. As we look towards last year's acquisition, I think we continue to see that as very favorable. Not only did it add accretive cash flow, but the operations side of the house has been able to add meaningful margin by reducing costs and on some of the PDP wells, finding opportunities that make that production curve up and to the right through low-cost workovers and other activity there. I think you can see the results of that. And David, you pointed out for themselves, just look at the growth, not only from the acquisition, but what we've been able to do from a development perspective year-over-year with EBITDA near 54% increase -- so I think we're very pleased. And hopefully, that answers your questions. I'm happy to follow on as needed.