SandRidge Energy Inc. released a letter to shareholders Wednesday, offering a rebuttal to what it called a “false and misleading campaign” by activist shareholders.
New York-based TPG-Axon Capital has asked SandRidge shareholders to replace the Oklahoma City energy company's directors in part because the company's stock price has tumbled 80 percent since the company's initial public offering.
“TPG-Axon simply does not have the facts straight,” SandRidge said in the statement. “Their campaign and ‘consent solicitation' is based on false, misleading and inflammatory statements regarding management, the board and the company — statements that are designed to distract you from the truth.”
The shareholder vote is scheduled to conclude March 15.
SandRidge on Wednesday addressed several of what it said are misleading statements by TPG-Axon, which owns 7 percent of SandRidge's outstanding stock.
The shareholder group has questioned SandRidge's financial performance and financial strength and has pointed out that its overhead spending is the highest of any peer company.
SandRidge said that it has exceeded analyst consensus estimates for earnings before interest, taxes, depreciation and amortization for each of the past five quarters and that the company's estimates of returns for Mississippian wells have been consistent with competitors.
The company also said its cost of capital is below its peers and that its net debt ratios declined over the last half of 2012 because of asset sales.
TPG-Axon also has claimed that CEO Tom Ward's large compensation and his family's personal investment in the Mississippi Lime have made his personal interests misaligned from those of the company's shareholders. The shareholder group also has pointed out that Ward has sold 75 percent of his personal stake in SandRidge.
SandRidge said on Wednesday, however, that Ward personally invested more than $600 million in SandRidge between 2006 and 2007 and still owns 5 percent of the company.
TPG-Axon also has criticized Ward and SandRidge's directors for having a lack of strategic direction because the company recently bought and sold acreage in the Permian Basin and because of its purchase last year of Gulf of Mexico oil producer Dynamic Offshore.
SandRidge, however, said the company has “clearly articulated and successfully executed a shift from natural gas to oil.”
“SandRidge's thoughtful approach to managing its asset base has resulted in the leading position in the high-growth Mississippian with a balance sheet and financial strength to support growth and deliver stockholder value,” the company said.
The shareholder group also has accused WCT Resources — a trust run by Ward's adult children — of improperly competing with SandRidge for acreage in the Mississippi Lime in northern Oklahoma and western Kansas.
SandRidge reiterated Wednesday its stance that WCT Resources is an independent company not related to SandRidge, saying “no person affiliated with SandRidge has any control over WCT Resources' activities.”
SandRidge also said transactions between WCT Resources and SandRidge “have been thoroughly reviewed and approved in advance by disinterested board members in accordance with company policy.”
TPG-Axon has pointed out that until about a year ago, WCT Resources' address was listed at SandRidge's headquarters and that the company is the fifth-largest acreage-holder in the Mississippi Lime.