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SandRidge Energy, Inc. Message Board

  • nikonikos1234 nikonikos1234 Mar 14, 2013 11:46 AM Flag

    still doesn't make sense

    SD has thousands of drilling locations in a statistically proven up play (within the core area of Woods Alfalfa, Grant, Southern Kansas) where they can drill wells that will ROR a minimum of 35% in the most conservative scenario you could lay out. With the increase in reservoir knowledge, the ESP factor, the efficiency of scale of the salt water disposal system, the nearterm statistical booking of PUDs, the new NGL contract, some upside to Nat Gas since 2012, and 30+ rigs running, why is this a dead end play?

    How about we take a look at the Bakken and Eagle Ford, I seriously doubt the economics at scale are better than the Miss. In other words, the industry is comparing the HM to a fictitious based, hypothetical resource play that makes 100% ROR on every well. This is largely BS. I think if you forced every public company to generate a 3rd party type curve ala Netherland Sewell for SD, you would see a type curve that does not jive with expectations. This is due to many factors but when you include all wells, the entire play doesn't look appealing. Analysts don't focus on the leading edge wells, what has been learned, and how the type curve is evolving over time, both up and down depending on the area that is drilled.

    All that being said, the SD management has the company on its best financial position in its company history.
    They don't have the Permian anymore, BUT they sold for 2.6 billion, which was a premium to its NAV. So they
    have flexibility.

    Other companies are drilling in the HM in the very areas that SD is. Midstates Petroleum recently acquired a large block in Alfalfa county, and they are making great wells. It is a statistical play, so that means the average well is making economic returns. They are adding a rig there currently. They have said that they desire to get well costs down to where SD has them, and they envy those economics.

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