The shareholder revolt at SandRidge Energy Inc. may finally be over.
The Oklahoma City oil company's board opted to move forward Wednesday with new leadership, replacing Tom Ward as chairman and chief executive.
“As we begin a new chapter in the company's history, we are focused on keeping our talented team motivated, enhancing our communications, and delivering on expectations by efficiently executing on our assets,” said James Bennett, the company's new CEO. “We are confident this will result in value creation for all stakeholders, including our stockholders, employees and the communities in which we operate.”
Bennett, who joined SandRidge in 2010 from private equity fund White Deer Energy, was promoted to president in March. He had been executive vice president and chief financial officer since January 2011.
Director Jeffrey Serota, a senior partner with a Los Angeles-based investment firm, was designated as interim chairman. He has been on the board since March 2007.
The announcement came after the market closed Wednesday, with SandRidge's stock up 11 cents to $5.08 a share. It rose another 26 cents in after-hours trading.
“I think it's probably a better day tomorrow for shareholders than it was with Ward at the helm,” Morningstar analyst Mark Hanson said Wednesday.
Hanson said Ward's ouster was “probably a foregone conclusion” once the company opted to settle a proxy fight with one of its largest shareholders in March.
He expects SandRidge's “changing of the guard” to benefit the company, with its new board and CEO more accountable to shareholders.
Hanson said Bennett seems like a talented successor to Ward, “based on his resume” with a background in private investment and deal-making.
Ward has been under fire since late last year, when two of SandRidge's largest shareholders began clamoring for a change in leadership to boost the company's value.
Hedge fund TPG-Axon Capital launched a proxy fight in December, urging fellow shareholders to replace the company's board with its own slate of directors.
A settlement was announced March 13 before any votes were tabulated. It added four seats to SandRidge's board for TPG-Axon representatives, who would have gotten a greater representation if Ward had not been fired by June 30.
TPG-Axon accused Ward of improperly benefiting from related-party transactions with companies owned by his relatives, but a four-month investigation by an independent law firm did not unearth any evidence that warranted Ward's termination, the company said Wednesday.
The board's nonemployee members, all but Ward, concluded new leadership was desirable.
“The board felt it was critical to have a leader who understands both the industry and how to increase shareholder value, and we were fortunate to have the ideal leader already on our team,” Serota said.
“With more than 20 years of energy industry and financial experience, including operational oversight and involvement, James (Bennett) will be a strong leader for our experienced management team and talented workforce.”
Ward was terminated “without cause,” which entitles him to more than $90 million in cash and SandRidge stock. He would have received nothing if the board had found cause to fire him.
Ward was not available for comment on Wednesday, but his attorney maintained he was vindicated, despite losing his job.
“Two separate board investigations have now confirmed that Tom Ward's actions were proper. No one has worked harder for or been more loyal to SandRidge Energy than Mr. Ward,” attorney Steven M. Bauer said. “Having weathered this storm, Mr. Ward is looking forward to the next chapter in his career, which he intends to continue in Oklahoma City.”
Ward, who co-founded Chesapeake Energy Corp. in 1989 with Aubrey McClendon, founded SandRidge in 2006 after acquiring a controlling interest in Riata Energy and moving the company to Oklahoma City from Amarillo, Texas. He also owns a stake in the Oklahoma City Thunder basketball team.
Ward's departure means four of SandRidge's top five executives have left the company since its settlement with TPG-Axon.
Former President Matthew K. Grubb departed as the March 13 settlement was announced, while the company disclosed in late April that executives Todd N. Tipton and Rodney E. Johnson were leaving.
Tipton, SandRidge's executive vice president of exploration, retired. Johnson, the company's executive vice president of corporate reserves and acquisitions and divestitures, left to pursue other opportunities, a regulatory filing showed.
One of the new executives at SandRidge is David Lawler, the former PostRock Energy Corp. CEO whose brother, Doug, took over Monday as CEO at Chesapeake. Lawler has been at SandRidge since 2011. He was promoted to chief operating officer in April.
Bennett, SandRidge's new CEO, told employees Wednesday the vision for the company has not changed. SandRidge remains an industry leader and an instrument for good in the community, Bennett wrote in a memo to employees.
Bennett said the company is well-positioned for success.
“We have more than $1 billion in cash, total liquidity of more than $2 billion, great assets in the Mississippian play and offshore GOM, and a strong team of motivated professionals,” he wrote. “Our operational results and execution continue to be exceptional.
“We have recently made decisions, many financial in nature, to ensure the long-term success of our company, and we will continue to find ways to increase efficiency and enhance profitability.”