Q1 2024 SandRidge Energy Inc Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the first quarter 2024 SandRidge Energy conference call. All lines have been placed on mute to prevent any background noise.
Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2024, Sandridge Energy Conference call.
Operator: Things have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1. As a reminder, today's call is being recorded. I will now hand today's call over to Scott Prestridge, SVP of Finances and Strategies. Please go ahead, sir.
Speaker Change: If you'd like to withdraw your question Press Star one.
Scott Prestridge: As a reminder, today's call is being recorded.
Scott Prestridge: I will now hand todays call them too.
Scott Prestridge: Got Prestwich S V P of financing strategies. Please go ahead Sir.
Scott Prestridge: Thank you and welcome everyone. With me today are Grayson Pranin, our CEO; Brandon Brown, our CFO, as well as Dean Parrish, our COO.
Scott Prestridge: Thank you and welcome everyone with me today are Grayson Brannan, our CEO, Brandon Brown, our CFO as well as Dean parish or C O L.
Scott Prestridge: We would like to remind you that today's call contains forward-looking statements and assumptions, which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. We may also refer to adjusted EBITDA and adjusted GNA and other non-GAAP financial measures. Reconciliations of these measures can be found on our website. With that, I'll turn the call over to Grayson.
Scott Prestridge: We would like to remind you that today's call contains forward looking statements and assumptions, which are subject to risk and uncertainty and actual results may differ materially from those projected in these forward looking statements.
Grayson: We may also refer to adjusted EBITDA and adjusted G&A and other non-GAAP financial measures reconciliations of these measures can be found on our website.
Scott Prestridge: With that I'll turn the call over to Grayson.
Grayson R. Pranin: Thank you and good morning. I'm pleased to report on another quarter and that the company's activity continues to translate to free cash flow from our producing assets. Before expanding on this, Brandon will touch on a few highlights.
Grayson: Thank you and good morning.
Brandon: I am pleased to report on another quarter and that the company. Its activity continues to translate to free cash flow from our producing assets.
Brandon: Before expanding on this brand and we'll touch on a few highlights.
Brandon L. Brown: Thank you, Grayson. Despite the downdrafts of natural gas prices during the period, the company generated an adjusted EBITDA of nearly $15 million. As we have pointed out in the past, our adjusted EBITDA is a unique metric for SandRidge due to us having no I and very little I. Given that we have no debt and a substantial NOL position, that seals our cash flows from federal income tax. On the I portion, we in fact generated $2.7 million of interest income during the quarter from cash held in various high-yield deposit accounts.
Brandon: Thank you Grayson.
Grayson R. Pranin: Right the downdraft of natural gas prices during the period.
Brandon L. Brown: We generated adjusted EBITDA of nearly $15 million.
Brandon L. Brown: Although we have pointed out in the past, our adjusted EBITDA and a unique metric Christina range.
Brandon L. Brown: Due to us having no I am very little T <unk>.
Brandon L. Brown: Given that we have no debt and substantial NOL position that shield, our cash flows from federal income taxes.
Brandon L. Brown: On the Io portion, we in fact generated $2 $7 million of interest income during the quarter from cash held in various high yield deposit accounts.
Brandon L. Brown: The company initiated a return of capital program last year with total cumulative dividends paid to date of $141 million or $3.81 per share, including the one-time dividend of $1.50 per share paid on February 20th of this year. In addition, our board declared an $0.11 per share dividend in Q1 2024, which represents a 10% increase over the regular way dividends paid in 2023 and was paid on March 29. Our board declared another $0.11 per share quarterly dividend last week that will be paid on May 31st, 2024 to shareholders of record on May 17th, 2024.
Brandon L. Brown: The company initiated a return of capital program last year with total cumulative dividends paid to date.
Brandon L. Brown: $141 million or $3 81 per share.
Brandon L. Brown: Including the one time dividend of $1 50 per share paid on February 20th of this year.
Brandon L. Brown: In addition, our board declared an <unk> 11 per share dividend in Q1, 2024, which represents a 10% increase over the regular way dividends paid in 2023 and was paid on March 29.
Brandon L. Brown: Our board declared another <unk> 11 per share quarterly dividend last week that will be paid on May 31, 2024 to shareholders of record on May 17 2024.
Brandon L. Brown: Cash, including restricted cash, at the end of the first quarter was more than $280 million, which represents over $5.60 per share of our common stock issued and outstanding. The company has no earned debt or revolving debt obligations as of March 31st, 2024 and continues to live within cash flow, funding all capital expenditures and dividend distributions with cash flow from operations and cash held on the balance sheet. Commodity price realizations for the quarter, before considering the impact of hedges, were $75.08 per barrel of oil, $1.25 per mcf of gas, and $23.65 per barrel of NGL.
Brandon L. Brown: Cash, including restricted cash at the end of the first quarter was more than $208 million, which represents over $5 60 per share of our common stock issued and outstanding.
Brandon L. Brown: The company has no arm dead or revolving debt obligations as of March 31, 2024.
Brandon L. Brown: We continue to live within cash flow funding, all capital expenditures and dividend distributions with cash flow from operations and cash held on the balance sheet.
Brandon L. Brown: Commodity price realizations for the quarter before considering the impact of hedges were $75 eight per barrel of oil.
Brandon L. Brown: $1 25 per Mcf of gas and.
Brandon L. Brown: And $23 65 per barrel of Ngls.
Brandon L. Brown: As alluded to earlier, we have maintained our large federal NOL position, which is estimated to be $1.6 billion at quarter end. Our NOL position has allowed us to shield our cash flows from federal income tax. Our commitment to cost discipline continues to yield results, with adjusted G&A for the quarter of $2.8 million, or $2.03 per DOE. We continue to generate net income for our shareholders. During the quarter, we earned net income of approximately $11 million, or $0.30 per basic share, and net cash provided by operating activities of approximately $16 million.
Brandon L. Brown: As alluded to earlier, we have maintained our large federal NOL position, which is estimated to be one $6 billion at quarter end.
Brandon L. Brown: Our NOL position has and will continue to allow us to shield our cash flows from federal income taxes.
Brandon L. Brown: Our commitment to cost discipline continues to yield results with adjusted G&A for the quarter of $2 $8 million or $2 <unk> per Boe.
Brandon L. Brown: We continued to generate net income for our shareholders. During the quarter. We earned net income of approximately $11 million or <unk> <unk> per basic share and net cash provided by operating activities of approximately $16 million.
Brandon L. Brown: The quarter concluded with the company producing approximately $15 million in free cash flow for the quarter, which represents a converting rate of approximately 99% relative to adjusted EBITDA. Before shifting to our outlook, we should note that our earnings release and 10-Q provide further details on our financial and operational performance during the quarter.
Brandon L. Brown: The quarter concluded with the company producing approximately $15 million in free cash flow for the quarter, which represents a conversion rate of approximately 99% relative to adjusted EBITDA.
Brandon L. Brown: Before shifting to our outlook, we should note that our earnings release and 10-K provide further details on our financial and operational performance during the quarter.
Speaker Change: Thank you Brandon.
Grayson R. Pranin: I thought it would be helpful to walk through some of the company's highlights, such as management strategy, operations, and other business details.
Speaker Change: Got it would be helpful to walk through some of the company's highlights.
Grayson R. Pranin: Management strategy operations and other business details.
Grayson R. Pranin: As I mentioned previously, we had positive results in free cash flow this quarter, while converting over 99% of EBITDA to free cash flow. Production for the quarter from our mid-con assets averaged over 15 MVOE per day, with oil volumes benefiting from our prior development in the Northwest SAC area. While we did experience higher than normal seasonal downtime associated with cold weather earlier in the quarter, our operations and field team did a great job of responding and bringing wells back online. Dean will expand on operations later in the call.
Grayson R. Pranin: As I mentioned previously we had positive results in free cash flow this quarter, while converting over 99% of EBITDA to free cash flow.
Grayson R. Pranin: Production for the quarter from our mid Con assets averaged over 15 <unk> per day with oil alignment has benefited from our prior development in the northwest stack area.
Grayson R. Pranin: While we did experience higher than normal seasonal downtime associated with cold weather earlier in the quarter.
Grayson R. Pranin: Our operations and field team did a great job in responding and bringing wells back online.
Grayson R. Pranin: Dean will expand on operations later in the call.
Grayson R. Pranin: The company's largest natural gas purchaser remained in ethane rejection during the quarter but has shifted to recovery in April. The duration of ethane recovery is dependent on the dynamics of pricing between natural gas and ethane moving forward. NGL volumes will increase while in ethane recovery as more ethane is extracted out of the natural gas stream, which could also benefit total DOE volumes. I'll just pause for a moment to revisit the key highlights of SandRidge.
Grayson R. Pranin: The company's largest natural gas purchaser remained in ethane rejection during the quarter.
Grayson R. Pranin: Shifting to recovery in April.
Grayson R. Pranin: The duration of ethane recovery is dependent on the dynamics of pricing between natural gas and ethane moving forward.
Grayson R. Pranin: NGL volumes will increase while on ethane recovery as more ethane is extracted out of the natural gas stream, which could also benefit total deal volume.
Grayson R. Pranin: I'll just pause for a moment to revisit the key highlights of Sandridge.
Grayson R. Pranin: Our asset base is focused in the mid-continent region with a primarily PDP well set that does not require any routine flaring of produced gas. These well-understood assets are most fully held by production, the long-history, shallowing, and diversified production profile, and double-digit reserve life. These assets include more than 1,000 miles each of owned and operated SWD and electric infrastructure over our footprint. The substantial owned and integrated infrastructure provides the company with both cost and strategic advantages.
Grayson R. Pranin: Our asset base its focus in the mid continent region with the primarily PDP well set.
Grayson R. Pranin: <unk> do not require any routine flaring of produced gas.
Grayson R. Pranin: He is well understood assets almost fully held by production the long history shallow ing and diversified production profile and double digit reserve life.
Grayson R. Pranin: These assets include more than 1000 miles each of owned and operated SWT in electric infrastructure over our footprint.
Grayson R. Pranin: This substantial owned and integrated infrastructure provides a company with both cost and strategic advantages.
Grayson R. Pranin: Bolstering Asset Operating Margin, Reducing Lifting, as well as Water Handling and Disposal Costs, and combined with other advantages, help de-risk individual well profitability for a majority of our producing wells down to $40 WTI and $2 Henry Hudson. While we have recently seen spot prices below $2.00 Henry Hub, WTI has been in the mid-70s to 80s, which has and will buoy our revenue in CASFA this year.
Grayson R. Pranin: Bolstering asset operating margin reduce lifting as well as water handling and disposal costs.
Grayson R. Pranin: And combined with other advantages help derisk individual well profitability for a majority of our producing wells down to $40 <unk> and $2 Henry hub.
Grayson R. Pranin: While we have recently seen spot prices below $2 Henry hub.
Grayson R. Pranin: <unk> has been in the mid 70 to 80.
Grayson R. Pranin: Which has and will buoy, our revenue and cash flow this year.
Grayson R. Pranin: Our assets continue to yield free cash flow with total net cash as of quarter end of more than $208 million. This cash generation potential provides several paths to increase shareholder value realization and is benefited by a low G&A burden. In fact, interest income earned from our cash assets nearly offset our cash Q&A this quarter.
Grayson R. Pranin: Our assets continue to yield free cash flow with total net cash as of quarter end of more than $208 million.
Grayson R. Pranin: This cash generation potential provides several path to increase shareholder value realization and it's benefited by a low G&A burden.
Grayson R. Pranin: In fact interest income earned from our cash assets nearly offset our cash G&A this quarter.
Grayson R. Pranin: As we realize value from our producing assets and generate cash, our board is committed to utilizing our assets, including our cash, to maximize shareholder value. SandRidge's value proposition is materially de-risked from a financial perspective by our strengthened balance sheet, robust net cash position, no debt, financial flexibility, and approximately $1.6 billion in annual wealth. Further, the Company is not subject to NBC's or other significant off-balance sheet financial
Grayson R. Pranin: As we realized value from our producing assets and generate cash our board is committed to utilizing our assets, including our cash to maximize shareholder value.
Grayson R. Pranin: Sandridge is value proposition has materially derisked from a financial perspective by a strengthened balance sheet robust net cash position no debt financial flexibility and approximately $1 6 billion and Nols.
Grayson R. Pranin: Further.
Grayson R. Pranin: The company is not subject to nbc's or other significant off balance sheet financial commitments.
Grayson R. Pranin: Finally, it is worth highlighting that we take our ESG commitment seriously and have implemented disciplined processes around it. We remain committed to our strategy to focus on growing the cash value and generation capability of our business in a safe, [inaudible] This strategy has five points. The first is to maximize the cash value and generation capacity of our incumbent MidCon PDP assets by extending and flattening our production profile with high rate of return production optimization projects, as well as continuously reducing operating and administrative costs.
Grayson R. Pranin: Finally, it is worth highlighting that we take our ESG commitments seriously and have implemented disciplined processes around them.
Grayson R. Pranin: We remain committed to our strategy to focus on growing the cash value and generation capability of our business in a safe responsible and efficient manner, while prudently allocating capital to high return organic growth projects and remaining open to value accretive opportunities.
Grayson R. Pranin: The second is to ensure we convert as much EBITDA to free cash flow as possible by exercising capital stewardship and investing in projects and opportunities that have high risk-adjusted fully burdened rates of return to economically add production in the current commodity environment. The third is to maintain optionality to execute on value-aggrieved merger and acquisition opportunities that could bring synergies. Leverage the company's core competencies, complement its portfolio of assets, where they incur approximately 1.6 billion of net operating losses or otherwise yield attractive returns for its shareholders. Fourth, As we generate cash, we will continue to work with our board to assess paths to maximize shareholder value, including investment in strategic opportunities. Turner Capital and other youth
Grayson R. Pranin: This strategy has five point.
Grayson R. Pranin: The first is to maximize the cash value and generation capacity of our incumbent Midcon Pvp assets.
Grayson R. Pranin: By extending and flattening our production profile with high rate of return production optimization projects as.
Grayson R. Pranin: As well as continuously pressing on operating and administrative costs.
Grayson R. Pranin: The second is to ensure we convert as much EBITDA to free cash flow as possible.
Grayson R. Pranin: By exercising capital stewardship.
Grayson R. Pranin: Investing in projects and opportunities that have high risk adjusted fully burdened rates of return to economically add production in the current commodity environment.
Grayson R. Pranin: The third is to maintain optionality to execute value accretive merger and acquisition opportunities that could bring synergies.
Grayson R. Pranin: Leverage the company's core competencies.
Grayson R. Pranin: Its portfolio of assets.
Grayson R. Pranin: It utilizes approximately $1 6 billion of net operating losses or otherwise yield attractive returns for its shareholders.
Grayson R. Pranin: Fourth.
Grayson R. Pranin: As we generate cash we will continue to work with our board to assess past to maximize shareholder value to include investment in strategic opportunities return of capital and other uses.
Grayson R. Pranin: To this end, the company expanded its Return of Capital Program this past quarter, which consists of $1.61 per share of dividends paid this year and a total of $3.81 per share since establishing our Return of Capital Program last year, an $0.11 per share regular wage dividend, an increase of 10% from last year, as well as an opportunistic share repurchase program of up to $75 million. Please note that the company's cash position is also a strategic advantage and provides competitive leverage in evaluating M&A, especially given the outlook for more persistent interest rates, capital markets, and the impact of the optionality on the number and type of opportunities that could become available at certain levels.
Grayson R. Pranin: To this end the company expanded its return of capital program. This past quarter, which consists of $1 61 per share of dividends paid this year.
Grayson R. Pranin: Total of $3 81 per share since establishing our return of capital program last year.
Grayson R. Pranin: And <unk> 11 per share regular way dividend, an increase of 10% from last year.
Grayson R. Pranin: As well as in the opportunistic share repurchase program of up to $75 million.
Grayson R. Pranin: Please note that the Companys cash position is also a strategic advantage and provides a competitive leverage in evaluating M&A.
Grayson R. Pranin: Especially given the outlook on more persistent interest rates capital markets and impact of the Optionality on the number and type of opportunities that could become available at certain levels.
Grayson R. Pranin: Know that there's a high bar at both the management and board levels for mergers and acquisitions. Management will continue to assess and promote the regular way return of capital discussion. Advanced M&A Evaluation, meet with shareholders and investors, and work with our board to further enhance tasks to maximize shareholder value. These topics remain paramount. In the interim, we have secured favorable banking terms and kept our task position diversified across interest-bearing accounts at multiple significant well-capitalized financial institutions. As Brandon mentioned before, the company earned $2.7 million in interest income this past quarter. The final staple is to uphold our ESG responsibility. Now, shifting operations, I will turn things over to Dean.
Grayson R. Pranin: There is a high bar at both the management and board level for mergers and acquisitions.
Dean: Management will continue to assess the regular way of return of capital discussions advanced M&A evaluations meet with shareholders and investors and work with our board to further enhanced path to maximize shareholder value. These.
Dean: These topics remain paramount.
Grayson R. Pranin: In the interim we have secured favorable banking terms and keep our cash position diversified across interest bearing accounts at multiple significant well capitalized financial institutions.
Dean: As Brandon mentioned before the company earned $2 7 million in interest income this past quarter.
Dean: The final stable is to uphold our ESG responsibilities.
Grayson R. Pranin: Now shifting operations I will turn things over to Dean.
Dean Parrish: Thank you, Grayson. Let's start on our capital program. This year, we plan to complete 14 artificial lift conversions as the company continues to focus on high return and value-adding projects that provide benefits such as lowering forward-looking costs, Enhancing Production on Existing Wells, and further moderating its decline profile. The systems we have and will be installing are tailored for the well's current fluid production and will reduce the electrical demand from the current artificial lift system, which is key to decreasing future utility costs.
Dean: Thank you, Jason let's start on our capital program.
Dean Parrish: This year, we plan to complete 14 artificial lift conversions as the company continues to focus on high return.
Dean Parrish: And value, adding projects that provide benefits such as lowering forward looking costs.
Dean Parrish: Enhancing production on existing wells.
Dean Parrish: And further moderating its decline profile.
Dean Parrish: The systems, we have and we'll be installing are tailored for the wells current fluid production and will reduce the electrical demand from the current artificial lift system and is key to decreasing future utility costs.
Dean Parrish: In addition to artificial lift conversions, our production optimization campaign this year includes heel completions, accessing previously unstimulated intervals, recompletions that would add new uphold zones and proven productive formations, and Refracts that would re-stimulate quality reservoirs. Activity and first production for a majority of the heel completion, recompletion, and refract projects will occur in mid to late second quarter.
Dean Parrish: In addition to artificial lift conversions or production optimization campaign. This year includes heal completions.
Dean Parrish: Accessing previously under stimulated intervals.
Dean Parrish: Re completions that would add new up hole zones, and proven and productive formations.
Dean Parrish: In <unk> that would re stimulate quality reservoir.
Dean Parrish: Activity and first production for a majority of the heel completion re completions and re frac projects will occur in mid to late second quarter.
Dean Parrish: Given the lower natural gas prices in the near term and that our mid-con assets are 99% held by production, which cost-effectively preserves the tenor of our development options, we did not operate a drilling rig this quarter and will defer more meaningful levels of development to maximize returns on our inventory in an appropriate commodity environment. That said, we will continue to monitor commodity price dynamics and maintain flexibility to adjust as we have in the past, while being disappointed in the near term.
Dean Parrish: Given the lower natural gas prices in the near term and that our mid con assets are 99% held by production.
Dean Parrish: With cost effectively preserves the center of our development option, we did not operated drilling rig this quarter and we will defer more meaningful levels of development to maximize returns on our inventory in an appropriate commodity environment.
Dean Parrish: That said, we will continue to monitor commodity price dynamics and maintain flexibility to adjust as we have in the past.
Dean Parrish: While being disciplined in the near term.
Dean Parrish: Commodity prices firmly over $80 WTI and $4 Henry Hub over a confident tenor and or a reduction in well costs are needed before we would return to exercise the option value of further development or well reactivation. The focused efforts over the past several quarters in optimizing our wells production profile and cost focus have contributed to flattening the expected base asset level decline of our already producing assets, a single-digit average over the next 10 years before the impact of further production optimization, development, or acquisition.
Dean Parrish: Commodity prices firmly over $80, <unk> and $4 Henry hub over our confidence tenor and order reduction in well costs are needed before we would return to exercise the option value of further development or while reactivation.
Dean Parrish: The focused efforts over the past several quarters and optimizing our wells production profile and cost focus has contributed to flattening the expected base asset level decline of our already producing assets.
Dean Parrish: Single digit average over the next 10 years before the impact of further production optimization development or acquisition.
Dean Parrish: The company continues to ensure that all projects meet high rates of return thresholds and remain capitally disciplined as the commodity price landscape changes. Now, shifting to lease offering expenses. Despite continued inflationary pressures and an increased well count from our prior well reactivation and development program, LOE and expense markovers for the quarter were approximately $10.9 million, or $7.92 per BOE. As Grayson highlighted earlier, our operations and field teams successfully managed the operational impacts of seasonal cold weather throughout the first quarter, which impacted the timing of expense markover activities, as we work to repair artificial lift failures to bring wells back online quickly
Dean Parrish: The company continues to ensure that all projects meet high rate of return thresholds and our remaining capital discipline as the commodity price landscape changes.
Dean Parrish: Now shifting to lease operating expenses.
Dean Parrish: Despite continued inflationary pressures and an increased well count from our prior well reactivation and development programs.
Dean Parrish: Low <unk> for the quarter were approximately $10 $9 million or $7 92 per Boe.
Dean Parrish: As Jason highlighted earlier, our operations and field teams successfully manage the operational impacts of seasonal cold weather throughout the first quarter.
Dean Parrish: Which impacted the timing of expense work over activities.
Dean Parrish: As we work to repair artificial lift failures to bring wells back online quickly.
Dean Parrish: While production in the first quarter was also impacted by seasonal cold weather, our projected long-term decline rates remain stable due to the nature of the company's asset base and the continued focus on production optimization efforts. We are projecting a decrease in expense workovers over the year, as well as a softening and utility cost and a reduced water handling cost.
Dean Parrish: While production in the first quarter was also impacted by seasonal cold weather.
Dean Parrish: Projected long term decline rates remained stable due to the nature of the company's asset base and the continued focus on production optimization efforts.
Dean Parrish: We are projecting a decrease in expense workovers over the year.
Dean Parrish: As well as the softening in utility costs and reduced water handling costs.
Dean Parrish: We will continue to actively press on operating costs through rigorous bidding processes, leveraging our significant infrastructure, Operations Center, and other company advantages.
Dean Parrish: We will continue to actively press on operating costs through rigorous bidding processes.
Dean Parrish: Leveraging our significant infrastructure.
Dean Parrish: Operation Center and other company advantages.
Grayson R. Pranin: With that, I'll turn things back over to Grayson.
Dean Parrish: With that I'll turn things back over to Grayson.
Grayson: Thank you Dean.
Grayson R. Pranin: I wanted to circle back briefly to reinforce a few salient points on commodity prices. The first is that a majority of our producing properties are economically viable down to $40 WTI and $2 Henry Hub. In addition, while oil made up 15% of our total production this quarter, it contributed over 50% of oil and gas revenue. Fight current natural gas prices at around $2, forward-looking future curves remain in contango in a recent strip projected to nearly double spot prices by this winter.
Grayson: I wanted to circle back briefly to reinforce a few points on commodity prices.
Grayson R. Pranin: Firstly is that a majority of our producing properties or economic down to $40 <unk> and $2 Henry hub.
Grayson R. Pranin: In addition, while all made up 15% of our total production this quarter.
Grayson R. Pranin: Contributed over 50% of oil and gas revenue.
Grayson R. Pranin: Current natural gas prices around $2 before looking future curves remain in contango and at recent strip projected to nearly double spot priced by this winter.
Grayson R. Pranin: Also, WTI is remaining constructive in the high 70s to 80s, and while we have judiciously decreased capital spending in light of natural gas prices, a more significant reduction in oil prices and a structural change in natural gas futures would be needed before we implemented more severe steps, like material proactive wells for trim. However, we will continue to monitor commodity prices and have the financial and operational flexibility to make further adjustments in response to positive or negative commodity prices in the future, prudently steward the business, and optimize cash. That said, and to reinforce my earlier comment,
Grayson R. Pranin: Also <unk> has remained constructive in the high 70% to 80%.
Grayson R. Pranin: While we are judiciously decreased capital spending in light of natural gas prices.
Grayson R. Pranin: More significant reduction in oil prices and a structural change in natural gas futures will be needed before we implemented and more severe steps like material proactive well for chairman.
Grayson R. Pranin: We will continue to monitor commodity prices and have the financial and operational flexibility to make further adjustments in response to positive or negative commodity prices in the future to prudently steward the business and optimize cash flows.
Grayson R. Pranin: That said and to reinforce my earlier comments.
Grayson R. Pranin: SandRidge's value proposition is materially de-risked from a financial perspective by a strong balance sheet, for BuffNet Cash Position, no debt, financial flexibility, and approximately $1.6 billion in annual wealth, long and short.
Grayson R. Pranin: <unk> value proposition is materially de risk from a financial perspective by a strong balance sheet robust net cash position no debt.
Grayson R. Pranin: <unk> financial flexibility.
Grayson R. Pranin: Approximately $1 $6 billion in Nols.
Grayson R. Pranin: Long and short.
Grayson R. Pranin: The company is well positioned to navigate, if not leverage, i.e. M&A Current Landscapes. While we have prudently reduced activity near-term, a tempered commodity price environment could be constructive for M&A, and producing mid-con assets will continue to generate cash flow near term with that recent strip, natural gas prices projected to increase over the next year plus. In the interim, the lower natural gas and NGL price environment could present more cost-effective opportunities for acquisitions, which would then be positioned to benefit from future price improvements. In a different way, to further leverage the temporary low natural gas price environment, as well as activity around us, we have allocated capital for targeted, high-graded leasing near our footprint this year, which could further bolster our drilling inventory. Shifting back to administrative expenses.
Grayson R. Pranin: Company is well positioned to navigate if not leverage.
Grayson R. Pranin: E M&A.
Grayson R. Pranin: The current landscape.
Grayson R. Pranin: While we are prudently reduce activity near term a tempered commodity price environment to be constructive for M&A.
Grayson R. Pranin: Producing mid con assets will continue to generate cash flow near term with that recent strip natural gas prices are projected to increase over the next year plus.
Grayson R. Pranin: And term the lower natural gas and NGL price environment to present more cost effective opportunities for acquisitions, which would then be positioned to benefit from future price improvements.
Grayson R. Pranin: In addition.
Grayson R. Pranin: To further leverage the temporal low natural gas price environment.
Grayson R. Pranin: As well as activity around us we have allocated capital for targeted high graded leasing near our footprint this year.
Grayson R. Pranin: Which could further bolster our drilling inventory in the future.
Grayson R. Pranin: Shifting back to administrative expenses.
Grayson R. Pranin: We're able to keep adjusted GNA at 2.8 million for the quarter, or approximately $2 per BOE, which compares favorably with our peers. The efficiency of our organization stems from our core values to remain cost-disciplined, as well as prior initiatives which have tailored our organization to be fit for purpose, to continue to balance the weighting of field versus corporate personnel to reflect where we actually create value and outsource necessary but more perfunctory and less core functions, such as operations accounting, land administration, IT, tax, and HR, given our efficient structure and ability to flex with both activity and commodity Our total personnel has remained consistent at just over 100 people while retaining key technical skill sets that both the experience and institutional knowledge of our area of operation.
Grayson R. Pranin: We're able to keep adjusted G&A to $2 8 million for the quarter or approximately $2 per Boe.
Grayson R. Pranin: Which compares favorably with our peers.
Grayson R. Pranin: The efficiency of our organization stems from our core values to remain cost disciplined.
Grayson R. Pranin: As well as prior initiatives, which is tailored our organization to be fit for purpose.
Grayson R. Pranin: We continue to balance the weighting of steel versus corporate personnel.
Grayson R. Pranin: Select where we actually create value.
Grayson R. Pranin: <unk> necessary, but more perfunctory unless core functions such as operations accounting land administration.
Grayson R. Pranin: Tax and HR.
Grayson R. Pranin: Given our efficient structure and ability to flex with both activity and commodity prices. Our total personnel has remained consistent at just over 100 people, while retaining key technical skill sets that both the experience and institutional knowledge of our area of operations.
Grayson R. Pranin: We believe that this efficiency instructor is a favorable advantage that could be effectively applied over a broader asset base and a benefit as a company evaluates the potential for M&A. In summary, the company has more than $208 million in net cash and cash equivalents at quarter end, which represents over $5.60 per share of our common stock issued and outstanding, a mid-composition that is 99% held by production, which preserves the option value of future development potential in a cost-effective manner.
Grayson R. Pranin: We believe that this efficiency and structure are favorable advantages.
Grayson R. Pranin: That can be effectively applied over a broader asset base.
Grayson R. Pranin: A benefit as a company evaluate the potential for M&A.
Grayson R. Pranin: In summary, the company has more than 208 million net cash and cash equivalent at quarter end, which represents over $5 60.
Grayson R. Pranin: <unk> share of our common stock issued and outstanding.
Grayson R. Pranin: Amid composition that at 99% held by production, which preserves the option value of future development potential in a cost effective manner.
Grayson R. Pranin: Low overhead, top tier adjusted GNA of approximately $2 per BOE for the quarter. No debt, and, in fact, negative leverage. Positive free cash flow and a growing net cash position supported by a diverse production profile flattening expected annual PDT decline to a single-digit average over the next 10 years in a multi-digit reserve life asset base. $1.6 billion in NOLs, which will shield future fee cash flow from federal income tax, and a large owned and operated SWD and electrical infrastructure which provides costs and strategic advantages requiring little to no future capital maintained.
Grayson R. Pranin: Low overhead top tier adjusted G&A of approximately $2 per Boe for the quarter.
Grayson R. Pranin: No debt and in fact negative leverage.
Grayson R. Pranin: Positive free cash flow and a growing net cash position supported by the first production profile.
Grayson R. Pranin: <unk> expected annual PBT declined single digit average over the next 10 years and a multi digit reserve life asset base.
Grayson R. Pranin: One $6 billion in Nols, which will shield future fee cash flow from federal income taxes.
Grayson R. Pranin: And a large owned and operated <unk> and electrical infrastructure, which provides cost and strategic advantages requiring little to no future capital and maintain.
Operator: This concludes our prepared remarks. Thank you for your time. We will now open the call to questions. At this time, if you would like to ask a question, press star 1 on your telephone keypad. Again, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: This concludes our prepared remarks. Thank you for your time, we will now open the call to questions.
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Operator: As.
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Operator: At this time there are no questions.
Operator: This does conclude today's call. Thank you for joining you may now disconnect your lines.
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