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Shares of SandRidge Energy rise on analyst upgrade

OKLAHOMA CITY (AP) -- Shares of SandRidge Energy Inc. rose Wednesday after an analyst raised his rating on shares of the Oklahoma City oil exploration and production company, citing the potential for cash flow financing to become more manageable.

THE SPARK: Canaccord Genuity analyst John Gerdes raised his rating to "Hold" from "Sell." He told clients in a research note that he believes the company's cash flow financing imbalances will remain but will be manageable.

SandRidge has predicted that it should be free cash flow neutral in 2014 and 2015, Gerdes said. The analyst expects the company to outspend cash flow by $1 billion or more per year in the foreseeable future.

"Yet, we believe financial strains should ease over the next two years," he wrote.

The cash flow shortfall this year should be covered essentially by the second Mississippian trust, he said. SandRidge should be able to cover the 2013 cash flow gap with the sell-down of common trust units and the divestiture of about 250,000 additional acres in the Mississippian formation in northwest Oklahoma and west Kansas.

SHARE ACTION: Shares of SandRidge rose 48 cents early in the day and were up a penny, trading at $6.21 by mid-afternoon. They've traded between $4.55 and $12.36 the past year.