In his first week on the job, new SandRidge Energy Inc. CEO James Bennett met with about half of the company's 2,000 employees to lay out his vision for the future.
Bennett said Thursday he is bullish about SandRidge's potential.
“I've been telling the employees, and I do believe this, we're at an inflection point now,” the 44-year-old Texas native said in an interview with The Oklahoman. “We've got a great group of talented employees that I'm very proud of. All the distractions and announcements over the last six months are behind us.
“Right now we're focused on executing our business plan.”
He said SandRidge is committed to getting the most out of its holdings in the oil-rich Mississippian formation in Oklahoma and Kansas.
“We've got 2 million acres in the Mississippian asset that are generating very good returns for us. We've got a good offshore business,” Bennett said. “We've taken our net debt levels down from $4 billion at year end down to $1.9 billion at the end of the first quarter. And we've got $2 billion of liquidity to go execute our business plan, so I say we're at an inflection point and positioned very well right now.”
Bennett was elevated to CEO on June 19 when SandRidge's board opted to part ways with founder Tom Ward, who had come under fire from shareholders for the poor performance of the company's stock.
SandRidge settled a proxy fight with shareholder TPG-Axon Capital in March after the hedge fund accused Ward of improperly benefiting from the company's dealings.
Bennett was tabbed at that time as the potential interim CEO as the SandRidge board, which had expanded to include four TPG-Axon representatives, mulled over Ward's future.
The board decided to part ways with Ward even though an independent investigation cleared him of any wrongdoing. It also decided to make Bennett the company's permanent chief executive.
Industry veteran Duke Ligon, who is chairman of Oklahoma City-based PostRock Energy Corp. and Blueknight Energy Partners, said Bennett was a “fantastic pick” for SandRidge.
Ligon, who has known Bennett since his days in private equity in New York more than a decade ago, said the two men served on PostRock's board together as the company was struggling to emerge from the financial problems that landed two executives of its predecessor company in federal prison.
“We inherited quite a mess at PostRock,” Ligon said. “James worked tirelessly with the finance guys on that.”
He praised Bennett as an energetic leader who is focused and hard working, so he was not surprised that he was chosen to succeed Ward at SandRidge.
“It's a great hire,” Ligon said.
Committed to community
Bennett joined SandRidge as executive vice president and chief financial officer in January 2011. He came to Oklahoma City from asset manager GSO Capital Partners, which was among SandRidge's earliest investors in 2007.
Bennett said he was drawn here by the opportunity to work for Ward at SandRidge, a company with a culture of working hard and doing the right thing.
That culture remains, Bennett said, thanks to SandRidge's talented employees. He praised their poise and character during the difficult times facing the company.
“I think the company is in a very good position right now,” he said. “We plan to continue to support the communities in which we operate and meet the commitments that we've made to Oklahoma City.”
SandRidge is allowing its sponsorship of the Oklahoma City Thunder to expire, but Bennett said the company remains committed to being an active part of the community.
Officials scrutinized the company's budget over the past few months, looking for ways to reduce “noncritical” spending.
“We made reductions in most, really all line items in our G&A (general and administrative) budget, except for one. That was our community giving dollars,” Bennett said. “We made no changes to ... our charitable giving.”
Bennett, a father of three, said he is interested in organizations that serve children, so he is on the board at CASA of Oklahoma County and active in Junior Achievement.
CASA Executive Director Lee Ann Limber said Bennett reached out to the agency, which advocates for abused or neglected children in the district court system, when he moved to Oklahoma City in 2011. He was involved in a similar program in Houston.
“He's very devoted to the cause,” she said.
Bennett started working with CASA as a member of its finance committee, where his expertise proved invaluable. He now serves on the agency's 16-member board.
“He just really brings a lot to the table and to the conversation,” Limber said. “He's been a gift to our program.”
SandRidge also has pared down its capital expenditure budget, choosing to focus on areas of the Mississippian play with the lowest risk and highest returns.
“We identified six what we call focus areas in northern Oklahoma and southern Kansas,” Bennett said. “That's where 90 percent of our drilling will be concentrated this year.”
He said SandRidge controls about 2 million acres in the play, where it was able to increase first-quarter production by 105 percent over the prior year.
The company expects 50 percent production growth in the Mississippian this year, while generating returns of 40 percent at current commodity prices.
“The play is working out very well for us,” Bennett said.
SandRidge decided to invest heavily in infrastructure, including power lines and waste disposal wells, when it started developing the play, so he said the company now has a decided edge over other operators there.
Not for sale
Bennett said he doesn't expect SandRidge to have any more problems with its largest shareholders. He has been in touch with most of them since he was elevated to chief executive.
“They're all supportive of where we're headed,” he said. “We've got all the pieces in place, including the management team, a supportive board, the right asset base and the right balance sheet to execute for the next couple of years.”
Bennett said he is planning to stick around at SandRidge, even though his appointment as CEO led some analysts to predict the company was being readied for sale.
“SandRidge is not for sale. We are in the business to maximize the value for our shareholders and to provide a return for them,” he said. “We, and our board, have made the decision that the best outcome for shareholders is to execute our assets, to take this $2 billion of liquidity, deploy it into the Mississippian and to grow our production and reserves and footprint in the Mississippian.
“We think that's the best outcome for shareholders.”