SandRidge Energy, Inc. Q2 FY2026 earnings call

• Financial and Balance Sheet Strength

  • The company holds no debt, ending Q2 2026 with ~$115 million in total cash (including restricted cash), equal to ~$3.09 per common share, giving it negative net leverage and strong financial flexibility.
  • The company has approximately $1.5 billion in federal net operating losses (NOLs) that shield income from taxes, supporting after-tax cash flow.
  • Adjusted G&A remains peer-leading at $1.52 per BOE, with a lean 100+ person workforce that outsources routine administrative functions to retain cost efficiency.
  • The company has paid $5.05 per share in total dividends since the start of 2023, including special dividends. A regular $0.13 per share dividend was declared after the quarter, payable August 31, 2026, eligible for the company's dividend reinvestment program.

• Operational Performance

  • The company grew YoY production and revenue driven by its Cherokee play development program and higher commodity prices. Q2 2026 average oil price realization (pre-hedge) was $95.35 per barrel, up from $71.11 per barrel in Q1 2026, while natural gas realization fell to $1.36 per MCF from $3.13 per MCF Q1 due to widening regional price differentials.
  • The one-rig operated Cherokee drilling program brought two wells online in Q2 2026, with two additional wells brought online in July 2026; the sixth of 10 planned annual wells is currently drilling, with the fourth drilled well marking the fastest and lowest-cost well to date.
  • A legacy shut-in well was successfully recompleted, exceeding initial production expectations, and the company continues to pursue low-cost value extraction from existing legacy assets.
  • The company maintains a 4.5+ year record with no recordable safety incidents.
  • A new gas-prone sub-member target below the Cherokee Shale was tested via a step-out well, which has shown exceptionally flat early production, with promising initial long-term recovery estimates that open potential stacked pay development opportunities for natural gas.

• Strategic Updates

  • A bolt-on acquisition of producing assets and 7,000 net leasehold acres in the Cherokee play, immediately adjacent to the company's core Roger Mills County position, was agreed in June 2026. The acquisition adds oil-weighted production and complements existing inventory, with closing expected in Q3 2026 and no planned headcount increases for integration.
  • The company's strategy prioritizes: maximizing incumbent asset value via optimization and cost control; disciplined capital stewardship focused on high full-cycle returns and maintaining a regular dividend; pursuing value-accretive M&A that complements the existing portfolio; returning excess capital to shareholders; and upholding ESG and safety commitments.
  • The company's asset base has 10+ year reserve life, no routine flaring, owned infrastructure that de-risk legacy well profitability down to ~$40 WTI and $2 Henry Hub, and low break-even organic growth opportunities, giving resilience across commodity price cycles.

Sand Ridge Energy is a single operating segment focused on oil and gas exploration, production, and development in the U.S. mid-continent. For Q2 2026: overall production reached 19.7 thousand barrels of oil equivalent per day (MBOE/d), an 11% year-over-year (YoY) increase, with oil production up 22% YoY. Total company revenue was just over $51 million, a 48% YoY increase. Adjusted EBITDA was $34 million, a 49% YoY increase. Net income was approximately $27 million (72 cents per common share), while adjusted net income was ~$21 million (57 cents per share), compared to $19.6 million (53 cents per share) and $12.2 million (33 cents per share) respectively in Q2 2025. Cash flow from operations was $42.4 million, up from $22.9 million YoY, and adjusted operating cash flow was $34.6 million, up from $25.6 million YoY. Total capital expenditure (excluding acquisition) was $16.3 million for the quarter, which came in below expectations. Lease operating expenses were $10.3 million ($5.73 per BOE), in line with guidance. Adjusted G&A was $2.7 million ($1.52 per BOE), compared to $2.4 million ($1.48 per BOE) YoY. There are no separate product segment financials or revenue contribution percentages disclosed in this call.

• Full year 2026 capital expenditure is guided to between $76 million and $97 million, consisting of $62 million to $80 million for drilling and completion activity, and $14 million to $17 million for workovers, production optimization, and high-graded leasing in the Cherokee play to expand future development inventory. This guidance is maintained from prior outlooks.
• The 2026 operational plan calls for drilling 10 operated Cherokee wells with one rig, and completing 9 wells, with the remaining completion activity planned to carry over to 2027. This plan is unchanged.
• Approximately 30% of 2026 production (at the guidance midpoint) is hedged, including 37% of natural gas production and 43% of oil production, to secure cash flow for the drilling program while retaining meaningful upside exposure to commodity prices. This hedge posture is maintained.
• The company reaffirms that all 2026 capital expenditures and capital return programs will be fully funded by operating cash flow, given its cash balance and no debt position.

• Commodity price volatility is explicitly noted as a core uncertainty that could cause actual results to differ materially from forward-looking projections, particularly given the sharp decline in natural gas realizations in Q2 2026 driven by regional price differential expansion.
• Supply chain constraints and inflationary pressures on capital and operating costs are recognized as risks; the company has pre-secured critical well components and operational equipment for the remainder of 2026 to mitigate this exposure, but continues to face upward pressure on diesel costs passed through via service provider fuel surcharges.
• Uncertainty remains around the long-term production performance and commercial development viability of the newly tested gas-prone sub-member target below the Cherokee Shale, with management noting that further production data is required to confirm stacked pay potential and economic development opportunities.
• All forward-looking statements are explicitly qualified by the note that actual results may differ materially from projections due to both known and unknown risks, with additional risk details available in the company's SEC filings and earnings release.

No investor or analyst questions were submitted during the Q&A portion of the call, so the conference concluded immediately after prepared remarks.