SandRidge Energy, Inc. (SD) Bundle
Understanding SandRidge Energy, Inc. (SD) Revenue Streams
Understanding SandRidge Energy, Inc.’s Revenue Streams
Revenue Breakdown
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|---|---|---|
| Oil | $ 16,871 | $ 21,333 | $ (4,462) | $ 47,202 | $ 60,327 | $ (13,125) |
| Natural Gas | $ 4,349 | $ 7,183 | $ (2,834) | $ 13,302 | $ 27,378 | $ (14,076) |
| NGL | $ 8,837 | $ 9,633 | $ (796) | $ 25,813 | $ 27,010 | $ (1,197) |
| Total Revenues | $ 30,057 | $ 38,149 | $ (8,092) | $ 86,317 | $ 114,715 | $ (28,398) |
Year-over-Year Revenue Growth Rate
The total revenues decreased by 21.2% from the third quarter of 2023 to the third quarter of 2024. For the nine-month period, revenues decreased by 24.8% compared to the same period in the previous year.
Contribution of Different Business Segments to Overall Revenue
- Oil contributed approximately 56.1% to total revenues in the three months ended September 30, 2024.
- Natural gas accounted for about 14.5% of total revenues during the same period.
- NGL represented approximately 29.4% of total revenues.
Analysis of Significant Changes in Revenue Streams
The decline in oil revenues was primarily due to lower commodity prices and decreased production volumes. For the three-month period ended September 30, 2024, the average price received for oil was $73.07 per barrel compared to $79.83 per barrel in the same period of 2023. Natural gas prices also fell to $0.92 per Mcf from $1.36 per Mcf year-over-year. Overall, the decrease in revenues is attributed to both lower average prices and a reduction in production volumes due to natural declines in producing wells.
A Deep Dive into SandRidge Energy, Inc. (SD) Profitability
A Deep Dive into SandRidge Energy, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was approximately $45.4 million compared to $59.1 million for the same period in 2023. The gross profit margin decreased from 51.5% in 2023 to 52.5% in 2024.
Operating Profit Margin: Operating income for the nine-month period ended September 30, 2024, was reported at $23.1 million, down from $29.5 million in 2023. The operating profit margin was approximately 26.8% in 2024 compared to 25.7% in 2023.
Net Profit Margin: The net income for the nine months ended September 30, 2024, was $45.4 million, resulting in a net profit margin of 52.5%. In contrast, the net profit margin for the same period in 2023 was 51.6%.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Gross Profit | $45.4 million | $59.1 million | -$13.7 million |
| Operating Income | $23.1 million | $29.5 million | - $6.4 million |
| Net Income | $45.4 million | $59.1 million | - $13.7 million |
| Gross Profit Margin | 52.5% | 51.5% | +1.0% |
| Operating Margin | 26.8% | 25.7% | +1.1% |
| Net Profit Margin | 52.5% | 51.6% | +0.9% |
Trends in Profitability: The profitability metrics show a decline in gross profit and operating income year-over-year. However, the net profit margin has improved slightly due to effective cost management strategies.
Industry Comparison: The average gross profit margin for the oil and gas sector is around 50%, while the operating margin typically hovers around 25%. The company's performance in 2024 aligns closely with industry averages, demonstrating competitive profitability.
Operational Efficiency: Operating expenses for the nine months ended September 30, 2024, totaled $56.0 million, a marginal decrease from $56.8 million in 2023. This indicates improved cost management, particularly in lease operating expenses, which decreased by 10.5% year-over-year.
| Expense Type | 2024 | 2023 | Change |
|---|---|---|---|
| Lease Operating Expenses | $28.7 million | $31.9 million | - $3.2 million |
| Production Taxes | $5.5 million | $8.5 million | - $3.0 million |
| Depreciation and Depletion | $16.8 million | $11.4 million | + $5.4 million |
| Total Operating Expenses | $56.0 million | $56.8 million | - $0.8 million |
Debt vs. Equity: How SandRidge Energy, Inc. (SD) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported no outstanding term or revolving debt obligations, reflecting a strong position regarding debt management. The total cash and cash equivalents, including restricted cash, stood at $94.1 million. This absence of debt indicates a preference for equity funding over debt financing in its growth strategy.
The company’s balance sheet demonstrates a significant equity base, with total shareholders' equity amounting to $468.111 million. The debt-to-equity ratio, an important measure of financial leverage, is effectively 0.00, illustrating a conservative approach to capital structure compared to the industry average which typically ranges between 0.5 and 1.5 for oil and gas companies.
Debt Levels
The company's debt levels are characterized by a complete absence of long-term and short-term debt as of the end of Q3 2024. This is a strategic choice that allows the company to maintain financial flexibility and minimize interest expenses, a common practice among firms in the volatile energy sector.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical indicator of a company’s financial leverage. As previously mentioned, the ratio stands at 0.00, significantly lower than the industry standard. This conservative financial structure suggests that the company relies on equity financing for its operational and investment needs, positioning itself favorably in times of market uncertainty.
Recent Debt Issuances and Credit Ratings
There have been no recent debt issuances, which aligns with the company's strategy of avoiding debt accumulation. The absence of debt also suggests a favorable credit rating, although specific ratings were not disclosed in the available financial documents. The focus on equity funding allows the company to invest in growth opportunities without the burden of debt repayments.
Balancing Debt and Equity Financing
The company effectively balances its financing approach by prioritizing equity over debt. This strategy minimizes financial risk and enables the company to allocate resources towards growth initiatives, such as acquisitions. In 2024, the company completed an acquisition of oil and natural gas properties for $123.8 million, funded entirely through cash on hand.
| Financial Metric | Value |
|---|---|
| Total Cash and Cash Equivalents | $94.1 million |
| Total Shareholders' Equity | $468.111 million |
| Debt-to-Equity Ratio | 0.00 |
| Recent Acquisition Cost | $123.8 million |
Assessing SandRidge Energy, Inc. (SD) Liquidity
Assessing SandRidge Energy, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated at 2.13, indicating a strong liquidity position.
Quick Ratio: The quick ratio stands at 1.78, suggesting that even without inventory, the company can cover its short-term liabilities comfortably.
Working Capital Trends: Working capital decreased to $66.8 million at September 30, 2024, down from $228.5 million at December 31, 2023.
| Period | Working Capital (in millions) | Current Ratio | Quick Ratio |
|---|---|---|---|
| September 30, 2024 | $66.8 | 2.13 | 1.78 |
| December 31, 2023 | $228.5 | 2.87 | 2.32 |
Cash Flow Statements Overview:
For the nine months ended September 30, 2024, cash flows from operating activities totaled $47.9 million, compared to $89.4 million in 2023.
Cash flows used in investing activities were ($138.7 million) in 2024, primarily due to acquisitions. In 2023, this figure was ($35.5 million).
Cash flows used in financing activities amounted to ($69.1 million) in 2024, down from ($79.1 million) in 2023.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $47.9 | $89.4 |
| Investing Activities | ($138.7) | ($35.5) |
| Financing Activities | ($69.1) | ($79.1) |
Potential Liquidity Concerns: The decrease in working capital and cash flows from operations raises concerns about future liquidity. Cash and cash equivalents, including restricted cash, were reported at $94.1 million as of September 30, 2024, down from $253.9 million at the beginning of the year.
Overall, the company remains in a position to meet its short-term obligations, but the significant decrease in working capital and cash flows warrants careful monitoring moving forward.
Is SandRidge Energy, Inc. (SD) Overvalued or Undervalued?
Valuation Analysis
The financial health of the company can be assessed through various valuation metrics, including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of October 31, 2024, the company's share price was approximately $16.10. The diluted earnings per share (EPS) for the last twelve months was $1.22. Therefore, the P/E ratio is calculated as follows:
P/E Ratio = Share Price / EPS = $16.10 / $1.22 ≈ 13.18
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was $12.00. The P/B ratio is calculated as:
P/B Ratio = Share Price / Book Value per Share = $16.10 / $12.00 ≈ 1.34
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company's enterprise value is calculated as market capitalization plus total debt minus cash. The total debt is $0 and cash on hand is $94.1 million. The EBITDA for the trailing twelve months was $60 million. Thus, the EV/EBITDA ratio is:
EV = Market Cap + Total Debt - Cash = (37.2 million shares $16.10) + $0 - $94.1 million ≈ $493.92 million
EV/EBITDA Ratio = EV / EBITDA = $493.92 million / $60 million ≈ 8.23
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
- 12 months ago: $12.50
- 6 months ago: $15.00
- Current price: $16.10
Dividend Yield and Payout Ratios
The company declared a one-time cash dividend of $1.50 per share in January 2024, with an ongoing quarterly dividend of $0.11 per share. The total dividend payments for the nine-month period ended September 30, 2024, were $68.2 million.
The dividend yield based on the current stock price is:
Dividend Yield = Annual Dividends per Share / Share Price = ($1.50 + (3 $0.11)) / $16.10 ≈ 10.09%
Analyst Consensus on Stock Valuation
According to the latest analyst reports, the consensus rating on the stock is:
- Buy: 6 analysts
- Hold: 3 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | 13.18 |
| P/B Ratio | 1.34 |
| EV/EBITDA Ratio | 8.23 |
| Current Share Price | $16.10 |
| 12-Month Stock Price Low | $12.50 |
| 12-Month Stock Price High | $16.10 |
| Dividend Yield | 10.09% |
| Total Dividend Payments (2024) | $68.2 million |
| Analyst Consensus | Buy: 6, Hold: 3, Sell: 1 |
Key Risks Facing SandRidge Energy, Inc. (SD)
Key Risks Facing SandRidge Energy, Inc.
Industry Competition: The energy sector is characterized by intense competition, with numerous independent and major oil and gas companies vying for market share. This competitive landscape can lead to pricing pressures and reduced margins. In 2024, the company reported a decline in total revenues to $86.3 million for the nine-month period ended September 30, 2024, down from $114.7 million in the same period of 2023.
Regulatory Changes: The energy industry is subject to extensive governmental regulations, which can impact operational costs and project feasibility. Changes in environmental laws, safety regulations, and tax policies can impose additional burdens on the company. The company reported a $15.4 million income tax benefit for the three and nine-month periods ended September 30, 2024, indicating potential fluctuations in regulatory impacts.
Market Conditions: The company's financial performance is significantly affected by fluctuations in commodity prices. The average NYMEX prices for oil and natural gas saw volatility, with oil prices averaging $73.07 per barrel and natural gas at $0.92 per Mcf for the three months ended September 30, 2024. As commodity prices decline, revenue and profitability can be adversely affected.
Operational Risks: The company faces risks related to its operational efficiency, including production declines from existing wells and challenges in completing new wells. For the nine-month period ended September 30, 2024, oil production decreased to 624 MBbls, down from 816 MBbls in the same period of 2023. Furthermore, the company did not bring online any new wells during the trailing twelve months as of September 30, 2024.
Financial Risks: The company has significant financial obligations, including cash dividends of $68.2 million for the nine-month period ended September 30, 2024. This represents a decrease from $77.8 million in the same period of 2023. The reduction in working capital to $66.8 million as of September 30, 2024, compared to $228.5 million at December 31, 2023, emphasizes the tightening liquidity.
Strategic Risks: Strategic decisions, such as acquisitions, can introduce risks related to integration and operational performance. The company acquired oil and gas properties for $126.0 million in the nine months ended September 30, 2024. While acquisitions can enhance production capabilities, they also carry the risk of underperformance or overvaluation.
| Risk Factor | Description | Impact | Financial Data |
|---|---|---|---|
| Industry Competition | Intense competition in the energy sector. | Pressure on pricing and margins. | Revenues decreased from $114.7 million to $86.3 million year-over-year. |
| Regulatory Changes | Changes in laws affecting operations and costs. | Increased operational costs. | Income tax benefit of $15.4 million in Q3 2024. |
| Market Conditions | Fluctuations in oil and gas prices. | Direct impact on revenue and profitability. | Average oil price at $73.07 per barrel. |
| Operational Risks | Production declines and challenges in new wells. | Reduced production volumes. | Oil production down to 624 MBbls from 816 MBbls. |
| Financial Risks | Significant financial obligations and liquidity concerns. | Increased financial strain. | Cash dividends of $68.2 million in 2024. |
| Strategic Risks | Risks associated with acquisitions. | Potential for integration issues. | Acquisitions totaling $126.0 million in 2024. |
Mitigation Strategies: The company has implemented various strategies to mitigate risks, including entering into commodity derivative contracts to hedge against price fluctuations. This can help stabilize revenue during periods of volatility. Additionally, the company continues to assess operational efficiencies to enhance productivity and reduce costs.
Future Growth Prospects for SandRidge Energy, Inc. (SD)
Future Growth Prospects for SandRidge Energy, Inc.
Analysis of Key Growth Drivers
SandRidge Energy, Inc. is poised for growth through several strategic initiatives. The company has recently completed an acquisition of oil and natural gas properties in the Cherokee Play of the Western Anadarko Basin for $123.8 million, which is expected to enhance production capabilities and reserves.
Future Revenue Growth Projections and Earnings Estimates
For the nine-month period ended September 30, 2024, SandRidge reported total revenues of $86.3 million, a decrease from $114.7 million in the same period of 2023, largely due to lower commodity prices. The company aims to offset these declines through increased production from newly acquired assets. Analysts project that the integration of these assets could lead to improved revenue streams in the upcoming quarters.
Strategic Initiatives or Partnerships That May Drive Future Growth
In conjunction with the Cherokee Play acquisition, SandRidge has engaged in a joint development agreement, allowing for participation in drilling and completion operations, which could potentially unlock additional reserves. This strategic partnership provides a pathway for enhanced operational efficiency and resource optimization.
Competitive Advantages That Position the Company for Growth
SandRidge's recent acquisition of $126.0 million in oil and gas properties reflects its strong balance sheet and ability to capitalize on market opportunities. The company benefits from a diversified asset portfolio, with 1.7 million barrels of proved oil reserves and a reduced cost structure, which includes lease operating expenses decreased to $5.82 per barrel of oil equivalent (Boe). This positions SandRidge favorably against competitors in the sector.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Total Revenues | $86.3 million | $114.7 million | Decrease of $28.4 million |
| Net Income | $45.4 million | $59.1 million | Decrease of $13.7 million |
| Capital Expenditures | $139.4 million | $32.9 million | Increase of $106.5 million |
| Oil Production (MBbls) | 624 | 816 | Decrease of 192 MBbls |
| Natural Gas Production (MMcf) | 13,979 | 15,373 | Decrease of 1,394 MMcf |
By leveraging its competitive advantages and strategic acquisitions, SandRidge Energy, Inc. is well-positioned to explore and exploit new growth opportunities in the evolving energy landscape. The focus on optimizing production and reducing operational costs will be critical as the company navigates through market fluctuations and seeks to enhance shareholder value.
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Resources:
- SandRidge Energy, Inc. (SD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SandRidge Energy, Inc. (SD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SandRidge Energy, Inc. (SD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.