Doubts return at SandRidge a year after CEO ousted by investors
In June 2013, activist investors got the board of SandRidge Energy Inc to fire its CEO Tom Ward, arguing that he had mismanaged the Oklahoma City company and destroyed billions in shareholder value.
The oil and gas producer’s shares rose as much as 50% in the year following Ward’s ousting on optimism about the impact of cost cutting, asset sales and higher initial production rates from some of its wells. But in the past 10 weeks a lot has gone wrong – and the stock has lost virtually all of those gains.
The energy company’s oil and gas output has dropped below Wall Street expectations, casting doubt on its growth prospects, and its Chief Operating Officer David Lawler – who had been seen as key to some of the improvements it had made – departed for BP Plc’s U.S. shale unit.
Plans to turnaround the company’s fortunes are currently being dashed on the rock formation known as Mississippi Lime, of which SandRidge has more than a million acres.
“They’ve got what many would consider to be second-tier rock,” said Mark Hanson, a Chicago-based analyst who follows SandRidge for Morningstar.
The head of one Houston-based firm which specializes in selling oil and gas properties said that the Mississippi Lime has not been “proving out as well as hoped for some,” as the rock is so far not producing as much oil and gas as many other basins.
While the company has succeeded in bringing down operating expenses and has drilled wells with increasingly higher initial production rates, output growth has been bumpy, something that has disappointed some investors and weighed on the stock.
Source: Reuters
