SandRidge shareholder pushing for changes

Shareholder complaints about corporate governance at Chesapeake Energy Corp. have resulted in CEO Aubrey McClendon's replacement as chairman of a reconstituted board and termination of a program that allowed him to buy a stake in every well drilled by the company.

SandRidge eliminated a similar program in 2008, paying $67 million to Ward for his stake in the company's wells.

In a Sept. 4 report, Morningstar analyst Mark Hanson praised Ward's efforts to transform SandRidge into an oil producer.

“Along the way, shareholders have paid a steep price, as poor returns on capital and the need to finance its acquisitions have led SandRidge to raise significant amounts of debt and nearly triple its post-IPO share count,” he wrote. “The company's future looks brighter than its past, however, given the inventory it has build in two of the more attractive liquids plays in the United States.

“As a result, we're bullish on SandRidge's ability to deliver profitable, double-digit growth over the next decade or so.”

TPG-Axon gradually has become a sizable shareholder in SandRidge over the past year, as its confidence in the company's value grew, according to its letter.

“We own SandRidge because we believe the company's position in the Mississippi Lime, together, with other assets that the company owns, is worth far more than the company's current enterprise value,” Singh wrote.

Selling holdings

SandRidge announced Thursday that it is mulling the possibility of selling its holdings in the oil-rich Permian Basin of west Texas to focus on the Mississippian.

“We've now drilled proven wells over 200 miles, just SandRidge, from Noble County, Oklahoma, all the way to Finney County, Kansas,” Ward said. “It just is an area that continues to have so much scale with high rates of return that you can build a company around it, which is fairly rare.”