After SandRidge Energy Inc. announced its new leadership late Wednesday afternoon, I talked to an analyst with Morningstar who opined the appointment of former hedge fund manager James Bennett as CEO could presage the sale of the company.
“This could be positioning the company for sale. Whether to private equity, another ind player, a larger E&P, I’m not sure,” analyst Mark Hanson said. “It makes me think that something is in the works there or at least being entertained. TPG-Axon has said as much publicly, that they will consider all options.”
Bennett — who took over for SandRidge founder Tom Ward after the company settled a proxy fight with TPG-Axon Capital, one of its largest shareholders — told the Wall Street Journal on Thursday that the company will focus on developing its most promising oil and natural gas properties.
“We’re committed to optimizing the assets, growing assets, deploying capital—not selling the company,” Bennett said. “We think with the balance sheet and liquidity we have right now … it’s best for shareholders to grow the business and execute on those assets.”
Edmond investment adviser Greg Womack predicted a similar message from the company Thursday before Bennett’s interview was posted online.
He said he wasn’t sure a sale made sense for SandRidge right now.
“The value’s probably not there at this point to maximize the investment,” Womack said. “What the stock is trading for is probably what the market value is, so if they put it up for sale no one’s going to buy it at a huge premium at this point.”
He said SandRidge needs to substantially reduce its capital expenditures as it continues working to cut costs and reduce debt. SandRidge should focus on increasing productivity in its most promising areas in the Mississippi Lime, which stretches across northern Oklahoma and southern Kansas.
“To capitalize on those assets, they’re going to have to probably have additional financing to maximize those efforts,” he said.
Womack said a sale could be possible once SandRidge “gets its house in order.”
He said Bennett, the new CEO, seems like a good choice to shepherd the company as it tends to its finances, with an eye toward maximizing its best assets.
Bennett, who had been SandRidge’s chief financial officer since January 2011, joined the company in 2010 from private equity firm White Deer Energy.