SandRidge Energy Inc. on Thursday reported stronger-than-expected quarterly earnings as its oil production increased 33 percent.
The Oklahoma City oil and natural gas producer reported a net loss of $232 million, or 58 cents per diluted share, as compared with a loss of $316 million, or 79 cents a share in the first quarter of 2012.
Excluding one-time items, SandRidge had adjusted net income of $21.2 million, up from an adjusted profit of $7.7 million one year ago. On a per-share basis, the adjusted income translates into a profit of 4 cents per share, from 2 cents in the year-ago quarter and doubling analyst consensus estimates of 2 cents for the first quarter of 2012.
Much of SandRidge's effort has been centered on the Mississippian Play in northern Oklahoma, where the Oklahoma City company is using 24 drilling rigs and plans to nearly double that number to 45 by the end of 2013.
“With continued success in this play, we estimate the oil industry will create more than 100,000 jobs during the next three to five years,” SandRidge CEO Tom Ward said.
SandRidge's stock price slipped 34 cents, or 4.7 percent, to $6.91 per share Wednesday before the earnings were released.
Like most of the country's independent oil and natural gas producers, SandRidge has spent much of the past three years adapting to low natural gas prices by switching its focus to oil.
“The earnings loss is not a concern at this point,” said Jake Dollarhide, CEO of Longbow Asset Management Co. in Tulsa. “The loss is like looking into a rearview mirror because we know where natural gas has been. SandRidge made a very bold move two years ago when it bought out Arena Oil and bought its way into an oil play. Today's report reflects that and is one reason why they are able to stand out again.”
SandRidge's oil and natural gas liquids production increased 33 percent to 3.43 million barrels, compared with 2.58 million barrels in the year-ago quarter. Natural gas production slipped 8.8 percent to 15.7 million cubic feet, from nearly 17.3 million cubic feet in the first quarter of 2011.
The increased oil production allowed the company also to increase its oil and gas revenue by 28 percent to $341 million, from $267 million one year ago. Operating cash flow improved to $153 million, from $102 million in the year-ago quarter.