SandRidge Energy Inc. has been in existence for only five years, but it is no longer the same company CEO Tom Ward crafted from the small production company he moved from Amarillo in 2006.
In its infancy, SandRidge focused on producing natural gas in west Texas, but Ward recognized a paradigm shift in the industry in 2008 that spurred the company's conversion.
“A dramatic change happened in oil,” he said Thursday in an interview with The Oklahoman. “As you look back on this, the risk in that play was that gas would come back and oil might rise, but wouldn't rise in a faster fashion than natural gas.
“It was a bold step.”
But time has proved SandRidge correct, as the historic ratio between oil and gas prices no longer exists.
“That's what we call our U-turn,” Ward told SandRidge employees Friday in a ceremony marking the company's anniversary. “Oil is our future.”
Ward insists the future is bright for SandRidge, with a new office complex under construction downtown and a new logo unveiled Friday.
“We are in the best financial shape that we have ever been in,” he said.
SandRidge's strategy for the next three years is to triple the company's earnings and double its oil production while cutting its debt ratio. The company also will employ three times as many people.
Ward said SandRidge expects to be able to fund its capital expenditure budget with cash flow by 2014.
“That's an incredible feat and one I don't think has ever been done before,” he said.
He expects SandRidge to meet its growth goals because of its asset base.
When the company turned its focus to oil, officials decided to buy into the most productive part of Texas' Permian Basin, which has been producing oil for 80 years.
“We focused on the best of the best,” Ward said. “It has produced the most oil in the smallest area of any place in the United States.”
He said the recession that began in 2009 actually helped SandRidge, as it was able to acquire acreage that wouldn't have been available if the economy had been in better shape.
SandRidge focuses on shallow reservoirs with a proven track record of production that can be accessed through conventional drilling methods.
Ward said the Mississippian play in northern Oklahoma and southern Kansas fits that bill as well.
SandRidge still is amassing acreage in the area, which Ward said could become the next big oil play in the United States.
He said the play will boost other companies as much as SandRidge, making it likely that more producers will choose to make their home in Oklahoma City.
“We think the natural home for those companies will be Oklahoma City in the next 20 years,” he said.