Renewable Revolution

Nicolas Torres April 4, 2016

Oklahoma-based SandRidge Energy confirmed on Wednesday that it has hired advisers to evaluate potential restructuring options.

SandRidge said in a Securities and Exchange Commission filing that it has engaged advisers to evaluate strategic alternatives that could include restructuring, refinancing of existing debt through a private restructuring or reogranizaiton under Chapter 11.

“As a result of these uncertainties and the likelihood of a restructuring or reorganization, management has concluded that there is substantial doubt regarding the company’s ability to continue as a going concern as it is currently structured,” SandRidge said.

SandRidge’s total debt stood at $3.6 billion as of December 31.
The company also had $11 million in outstanding letters of credit as of December 31 and preferred stock outstanding with an aggregate liquidation preference of $542 million.

The company said its “substantial level of indebtedness” and dividends tied to its outstanding preferred stock increase the possibility that it may be unable to generate enough cash to make principal, interest or divided payments.

SandRidge added that the inclusion of a statement in its full year consolidated financial statements citing the firm’s “substantial doubt” about its ability to remain a going concern could result in a default under the terms of its senior secured revolving credit facility.

If SandRidge  does not obtain a waiver for that covenant within 30 calendar days its senior credit facility lenders will be able to accelerate maturity of the debt.

“These defaults create additional uncertainty associated with the company’s ability to repay its outstanding long-term debt obligations as they become due and further reinforces the substantial doubt over the company’s ability to continue as a going concern,” SandRidge said.

The company elected to take a 30 day grace period last month to defer making $21.7 million in interest payments that were due February 16.

SandRidge said it had sufficient liquidity to make the payments but chose to use the grace period to continue its “ongoing discussions with stakeholders.”

The New York Stock Exchange delisted shares of SandRidge in late January after the stock’s price stayed below $1 per share for more than seven months.

SandRidge booked a fourth quarter 2015 adjusted EBITDA of$79 million in the fourth quarter of 2015, down from $239 million in the fourth quarter of 2014.
Full year adjusted EBITDA for 2015 was $589 million, down from $873 million in 2014.

SandRidge is also dealing with a class action lawsuit filed earlier this month against the firm, SandRidge’s former CEO Tom Ward and Oklahoma-based Chesapeake Energy.

The lawsuit, filed by Dallas-based law firm Burns Charest in an Oklahoma federal court, alleges that the “defendants violated federal antitrust laws by rigging bids and limiting competition for oil and gas leases in northwest Oklahoma.”

The defendants listed in the suit have not commented on the matter. 

http://petroglobalnews.com/2016/04/sandridge-energy-3-6-billion-debt-flags-bankruptcy-risk/