Not Your Father’s SandRidge

By Robert Rapier • May 26, 2017

The SandRidge Energy, Inc. (NYSE: SD) that emerged from Chapter 11 bankruptcy last October looks nothing like the SandRidge that was originally founded in 2006 by Chesapeake Energy (NYSE: CHK) co-founder Tom L. Ward. The company shed $3.7 billion in its reorganization and came out of bankruptcy with zero net debt and more than $500 million in liquidity. The new company was relieved of $300 million in annual interest payments.

Since its bankruptcy, SandRidge has generated more relative cash flow from operations (CFO) than any other oil and gas producer. (For additional details, see Seeking Value In Cash Flow from The Energy Strategist). But the reorganization has created a company that is cheap according to every important financial metric.

I wouldn’t have touched SandRidge prior to the reorganization, but this is now a company with a clean balance sheet and a good portfolio of producing assets. Companies that produce similar amounts of oil and gas are trading at 5-10x the enterprise value of SandRidge. It’s a worthy addition to the portfolio for growth-oriented investors. Buy SandRidge below $23.

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James P

05/26/17 ‐ 8:53am ET May 26, 2017 at 8:53am ET

Why does this stock not show up in the Growth Portfolio? Is it simply that it will be there tomorrow? This is a new addition? Just trying to understand, as a newer member, how alerts like this integrate with the Portfolio tables. Thanks. – James P

Robert Rapier

05/26/17 ‐ 10:26am ET May 26, 2017 at 10:26am ET

Just added this morning James. Yes, it should be in there as soon as someone has a chance to put it in.

Freddie

12/31/17 ‐ 8:02pm ET December 31, 2017 at 8:02pm ET

hi robert, are your thoughts still the same on sandridge, do you still think its a good buy?

Robert Rapier

01/02/18 ‐ 11:44am ET January 2, 2018 at 11:44am ET

I still think they are undervalued, but they raised some eyebrows with their recent attempted takeover bid. Carl Icahn is an investor (a good endorsement) and he got them to cancel it, but it was cause for concern about their decision-making.

Shares are up a bit since recommending it, but the most recent quarterly financials weren’t all that good. I still think it’s a buy, but it’s not at the top of my list now. The Icahn investment will help keep them honest, though.

Freddie

01/02/18 ‐ 11:15pm ET January 2, 2018 at 11:15pm ET

thanks

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About The Author

Robert Rapier

Bio | Archive

It's hard to imagine anyone better suited to covering the energy-investment waterfront than Robert Rapier.

Robert is no armchair analyst—he has two decades of in-the-trenches experience in a wide range of fossil fuel and biofuel technologies, including refining, natural gas production, gas-to-liquids, ethanol production and butanol production.

During a six-year stretch at ConocoPhillips, Robert ran a team of engineers in Scotland working on oil and gas projects in the North Sea.

For two years, Robert was an efficiency expert in a Texas petrochemical plant. The process changes he implemented saved the facility $9 million a year. He later worked as the Engineering Director for a Dutch environmental-technology company and provided engineering support for a Chinese facility the company was constructing.

Robert was also a butanol engineer in Germany for the Celanese Corporation, where he designed a novel butanol unit that cut production costs by $5 million per year.

In all, Robert has spent more than a dozen years working on liquid fuels technologies. Along the way he's picked up five patents, including one for a breakthrough way to convert ethane into ethylene (U.S. Patent 7,074,977).

Now, in addition to guiding readers to timely investments in Utility Forecaster and Rapier's Income Accelerator, Robert travels the world evaluating startup energy companies for deep-pocketed investors. After grilling management and assessing the technology on-site, he makes a go/no-go investment decision. His wealthy private investors and hedge fund backers trust him to make the right choice for the same reason we do: his vast real-world experience in just about every facet of the energy industry. If Robert votes thumbs-up, millions of dollars flow into these cutting-edge outfits.

Robert earned his master of science in chemical engineering and a bachelor of science in chemistry and mathematics (double major) at Texas A&M University. He tells us he was "this close" to finishing his Ph.D. before he decided he was having a lot more fun making money in energy stocks.

A prolific writer, Robert's articles have appeared in Forbes, The Wall Street Journal, The Washington Post and the Christian Science Monitor -- and he has been a featured expert on 60 Minutes and The History Channel. His new book, Power Plays: Energy Options in the Age of Peak Oil (Apress, 2012), helps investors sort through doom and gloom, hype and misinformation to understand the true costs, benefits and trade-offs for each of our major energy options.

In what little spare time he has left, Robert consults for a number of energy projects, including biodiesel, ethanol, butanol and biomass gasification facilities.