SandRidge Energy Inc. on Thursday posted a narrower fourth-quarter loss backed by increased oil and natural gas production.
The Oklahoma City-based energy company said it lost nearly $302 million, or 63 cents a share, in the quarter, up from a loss of almost $389 million, or 97 cents a share, in the year-ago period.
Adjusting for one-time expenses, the company reported profits of $35.3 million, or 6 cents a share, beating consensus analyst expectations of a break-even quarter.
The adjusted net income was up from $8.7 million, or 2 cents a share, in the year-ago quarter.
SandRidge CEO Tom Ward attributed the earnings and production improvements to the company's efforts in the Mississippi Lime in northern Oklahoma and western Kansas.
“The Mississippian has met or exceeded our expectations,” Ward told The Oklahoman Thursday. “We have always had high expectations of the play.”
SandRidge's revenues improved to nearly $1.34 billion in the fourth quarter, up from almost $374 million in the fourth quarter of 2011.
The Oklahoma City energy company's earnings were boosted by a 53 percent gain in oil production to more than 5 million barrels in the fourth quarter and a 70 percent increase in natural gas production to 28.7 billion cubic feet.
For the full year, SandRidge recorded profits of $86 million, or 19 cents per share, up from $52 million, or 13 cents per share, one year ago. Total revenues increased to $2.7 billion, up from $1.4 billion in 2011.
Total debt increased 51 percent to $4.3 billion at end of 2012. But SandRidge said Tuesday it has completed the sale of its Permian Basin assets for $2.6 billion, effective Jan. 1. The company said it will use the proceeds to pay off $1.1 billion in debt and help fund its Mississippi Lime development.
“One of the keys to the quarter is how strong we are financially,” Ward said. “This is the strongest financial position the company has ever been in.”
Ward declined to comment on the ongoing proxy fight SandRidge is in with one of its largest shareholders.
Hedge fund TPG-Axon Capital, which owns about 7 percent of SandRidge's outstanding stock, is pushing fellow shareholders to oust Ward and the current board, arguing the market has lost confidence in them. TPG-Axon has nominated its own candidates to replace SandRidge's board.
Shareholders have until March 15 to decide whether to side with TPG-Axon or retain the company's current leadership.
Also on Thursday, SandRidge lowered its 2013 production guidance, largely because of the Permian sale.
The company said it now expects to produce 15.9 million barrels of oil and 110 billion cubic feet of natural gas on the year, down from its previous guidance of 19.5 million barrels of oil and 118 billion cubic feet of natural gas.
Increased drilling in the Mississippi Lime, however, should allow SandRidge to raise its production in 2014, Ward said.
Edmond investment adviser Greg Womack said he is pleased by SandRidge's announcement Thursday.
“It seems like we're seeing some fundamental improvements along with production improvements. That's encouraging,” Womack said. “They're focused going forward on the Mississippi Lime. That's where they're going to have more oil. Based on that, their fundamentals should continue to improve.”