SANDRIDGE ENERGY, INC. FILES DEFINITIVE CONSENT REVOCATION MATERIALS AND SENDS
LETTER TO STOCKHOLDERS
Recommends Stockholders Support Current Highly Qualified Board and Reject the
TPG-Axon Group's Nominees and Proposals
OKLAHOMA CITY, Jan. 18, 2013
OKLAHOMA CITY, Jan. 18, 2013 /PRNewswire/ -- SandRidge Energy, Inc. (the
"Company" or "SandRidge") (NYSE: SD) today announced that it filed definitive
consent revocation materials with the Securities and Exchange Commission (the
"SEC") in connection with the TPG-Axon Group's consent solicitation. SandRidge
also launched a dedicated website for information pertaining to the Company's
response to the TPG-Axon Group's consent solicitation at
In addition, SandRidge sent a letter urging stockholders to support the
Company and Board by disregarding any mailings sent by the TPG-Axon Group and
signing, dating and returning SandRidge's WHITE consent revocation card.
Included below is the full text of the letter to SandRidge stockholders:
January 18, 2013
Dear Fellow Stockholder:
YOUR SUPPORT IS CRITICAL
TO PROTECTING THE VALUE OF YOUR INVESTMENT IN SANDRIDGE ENERGY
Please sign, date and return the enclosed WHITE CONSENT REVOCATION CARD today!
Please DO NOT sign or return any materials sent to you by the TPG-Axon Group.
Over the last several years, your Board and management team have taken
strategic actions to transform SandRidge into the leading operator in the
Mississippian Lime play of northern Oklahoma and western Kansas. These
actions have established SandRidge as an industry leader in what is widely
considered to be one of the most valuable oil-rich basins in the United
OUR STRATEGIC FOCUS ON THE MISSISSIPPIAN PLAY IS CREATING SIGNIFICANT VALUE
Our position in the Mississippian play is enabling us to capitalize on what we
believe to be among the highest rates of return for horizontal drilling in the
U.S. today and to create significant current and future value for
To position SandRidge for significant growth, we have undertaken a number of
initiatives to improve our liquidity and the overall financial strength of the
Company. In particular, the announced sale of our mature Permian assets for
$2.6 billion will generate cash proceeds of over $1.4 billion in excess of our
net investment, dramatically reduce our net debt balances and give us the
resources needed to fund our growth in the Mississippian.
DON'T LET NOMINEES HAND-PICKED BY HEDGE FUND TPG-AXON TAKE CONTROL OF YOUR
REJECT THE TPG-AXON GROUP'S NOMINEES AND PROPOSALS
TPG-Axon is a New York-based hedge fund that:
owas formed by the former co-head of Goldman Sachs' proprietary trading
opurchased the vast majority of its SandRidge shares only in the first half
ois focused on its own short-term objectives and has sold shares of the
Company's stock five times in the last year and three times since July 2,
2012, including as recently as December 10, 2012; and
ois seeking to replace all members of your duly elected Board with its own
nominees but has failed to identify proposed directors or a management
team with expertise in oil and gas exploration and development generally
or in the Mississippian Lime play, the Company's principal asset.
Furthermore, Mr. Singh, one of TPG-Axon's nominees and the Chief Executive
Officer of TPG-Axon Capital, has no experience in running an operating
Through multiple letters, regulatory filings and media interviews, TPG-Axon
has engaged in a false and misleading campaign and "consent solicitation"
filled with half-truths and unsubstantiated statements regarding management,
the Board and the Company. TPG-Axon has repeatedly made inflammatory and
false statements with one simple goal – they want to distract you from the
facts regarding SandRidge and its strategy for creating value as they attempt
to replace your experienced Board with nominees they have selected, most of
whom possess no relevant oil and gas exploration and production experience at
all. If successful, the TPG-Axon Group's proposals would turn control of the
Company over to a new board of directors nominated exclusively by TPG-Axon.
The election of the TPG-Axon Group's nominees would not provide you with any
control premium for your shares and we believe that their nominees would
immediately encourage and facilitate a major restructuring or a premature sale
of SandRidge designed to benefit short-term investors. Don't allow TPG-Axon
to turn a quick profit at the expense of investors who care about generating
The TPG-Axon Group's proposals place your investment in SandRidge at risk by
asking you to turn control of the Company over to nominees lacking relevant
experience and with no clear strategic plan to maximize value. In addition,
the TPG-Axon Group's plan, if successful, could constitute a "change of
control" under certain SandRidge agreements requiring the Company, among other
things, to offer to buy back over $4.3 billion of its senior notes, which
could be materially harmful to the Company.
Because of TPG-Axon's self-interested campaign, you will likely receive
multiple mailings from them asking you to change the way SandRidge's directors
are elected and to replace the current Board. Please do not sign or return
any materials sent to you by TPG-Axon or its affiliates. Doing so puts your
investment in SandRidge at risk. The only action we recommend you take is to
sign, date and return the enclosed SandRidge WHITE CONSENT REVOCATION CARD.
YOUR EXPERIENCED BOARD AND MANAGEMENT TEAM
ARE WORKING HARD TO BUILD VALUE FOR YOU
In response to the sharp decline in gas prices in 2008 and the persistently
depressed prices for natural gas, your Board and management team have been
singularly focused on transforming the Company into an oil-focused producer
while growing the Company's asset base and improving its financial position.
Over the past several years, we have built a strong platform to drive future
performance and stockholder value. This includes:
oSuccessfully repositioning SandRidge from a company with 76% of its
revenues attributable to natural gas in 2008 to a company with 86% of its
revenues coming from oil today
oBecoming the industry leader in one of the most valuable basins in the
U.S. – the Mississippian Lime play – where our production has grown over
18x from the third quarter of 2010 to the third quarter of 2012 based on
our ability to leverage our operational expertise and experience across
our high quality, high return assets
As a first mover in the Mississippian, SandRidge invested $500 million to
accumulate approximately two million acres in the play. SandRidge has
developed highly critical scale and infrastructure in the region while
positioning the Company as the most efficient operator in the play.
In 2011 and early 2012 SandRidge sold approximately 550,000 net acres in the
play through offerings in publicly traded royalty trusts and joint ventures
for total consideration of over $2 billion in cash, drilling carries and
royalty trust units providing capital to support the Company's continued
oStrengthening the Company's financial position significantly
As a result of the actions described above, together with proceeds from the
divestiture of non-core assets, the Company has significantly improved its
financial strength and liquidity. In particular, the Company has reduced its
net debt to EBITDA, a metric used by the Company's lenders, from 4.6x at
September 30, 2011 to 3.2x at September 30, 2012. Further, the Company
expects that upon receipt of proceeds from the sale of Permian Basin assets,
the Company's net debt to EBIDTA ratio will drop to under 2.0x.
Additionally, the Company has reduced its 2013 capital expenditure budget by
19%, as compared to 2012.
oGenerating significant value from Permian Basin assets
The Permian Basin assets were a key part of our transition to an oil-rich
E&P company. Through our investments in the region we grew production to
approximately 30,000 Boe/d – a 165% increase in production growth over the
past three years. Importantly, our strength in the basin allowed us to
capitalize on the demand for mature, conventional Permian assets through our
recently announced sale of most of these assets for $2.6 billion, generating
cash proceeds of over $1.4 billion in excess of our net investment.
Including the sale and after applying a portion of the proceeds to debt
reduction, our pro forma cash balance and liquidity at September 30, 2012
would have been approximately $2 billion and $2.8 billion, respectively.
Following the sale, our increased cash and liquidity position leaves us with
a stronger balance sheet and the ability to fund capital expenditures to
support future development in the higher growth Mississippian play.
THE PERMIAN SALE RECEIVES BROAD SUPPORT FROM A VALUATION
AND BALANCE SHEET PERSPECTIVE^i
"…the sale price was above the high end of our $1.7B-$2.3B expectation and
likely above broader Street expectations."
Hsulin Peng, Baird Equity Research, December 19, 2012
"On our estimates, the deal brings a solid improvement to 2013 debt metrics, a
slim benefit to 2014, and more importantly, supports funding through 2014 and
removes any liquidity risk."
Ryan Todd, Deutsche Bank Securities Inc., December 20, 2012
"This transaction bolsters SD's liquidity position, improves 2013 leverage
metrics, and provides room for increased focus on its core Mississippian
Joseph Stewart, Citi Research, December 20, 2012
"With the balance sheet now improved [following the Permian sale], as the
company spends money to aerially test the acreage and gets more production
profiles behind existing wells, investor comfort with the NAV will increase
and the stock should move up over time."
Amir Arif, Stifel Nicolaus, December 20, 2012
"...it appears SandRidge continues to adapt to what makes the most economic
Neal Dingmann, SunTrust Robinson Humphrey, December 20, 2012
OUR STRATEGIC PLAN BEST POSITIONS SANDRIDGE TO DELIVER VALUE
Building on our strong foundation, the Board and management are aligned on a
strategy to capitalize on SandRidge's leading position and operating
efficiencies in the Mississippian to deliver enhanced value to stockholders.
The Mississippian is Poised for Value-Creating Growth
Significant investments beginning in January 2010 – including $500 million in
the acquisition of leaseholds and $1.7 billion in drilling capital and
infrastructure – allowed the Company to grow production in the Mississippian
to 30.2 Mboe/d, increasing 138% from the third quarter of 2011 to the third
quarter of 2012. During 2012, the Company drilled 396 wells to end the year
with 600 wells operating in the region, making it the largest operator and
most active driller across the play. SandRidge continues to hold 1.85 million
net acres in the play, on which there are over 11,000 future drilling
locations to support development over the next 18 years. Plans to expand from
32 rigs at the end of 2012 to 41 rigs in 2013 will facilitate continued
high-return growth in the region.
Operating Efficiencies Drive Returns
SandRidge has created a unique advantage in the Mississippian Lime through its
extensive investment in critical infrastructure, including a proprietary
saltwater disposal system and electrical infrastructure. Our investments have
resulted in the lowest operating costs in the play. Going forward, per well
drilling and completion costs are expected to continue to decrease, further
enhancing returns and stockholder value.
INFORMED WALL STREET ANALYSTS AGREE ON THE VALUE OF
SANDRIDGE'S ASSETS IN THE MISSISSIPPIAN^ii
"Our thesis remains that the Miss Lime play is an attractive resource play
with better overall economics than the Permian or Bakken. SD's exposure to the
play provides meaningful exposure to the Miss Lime and strong underlying NAV."
Amir Arif, Stifel Nicolaus, December 20, 2012
"With the Permian soon in the rearview mirror, SandRidge intends to focus on
the Mississippi Lime play. Thus far the play has shown strong production gains
and, despite some fears that it is more gassy than first thought, the returns
have been strong. With SandRidge now in a better liquidity position, we expect
activity in the play to move significantly higher as the company focuses on
the Mississippi Lime as its growth driver going forward."
Jason Wangler, Wunderlich Securities, January 2, 2013
"The most recent change is toward the company's highest returns as numerous
Horizontal Mississippian well results now indicate returns can be as much as
20% higher than the Permian at corresponding commodity prices."
Neal Dingmann, SunTrust Robinson Humphrey, December 20, 2012
YOUR BOARD IS HIGHLY QUALIFIED AND HAS
EXTENSIVE EXPERIENCE IN THE OIL AND GAS INDUSTRY
SandRidge has strong, independent and experienced directors who are highly
qualified to continue to lead the Company in executing its strategic plans and
who are focused on serving all of the Company's stockholders. Collectively,
the Board brings relevant expertise and experience in many important areas,
including expertise in the exploration and production sector of the oil and
gas business as well as specific experience in developing the Mississippian
Lime play and the sophisticated techniques required to succeed in this area;
significant senior management experience; oversight of public company
financial management matters; and background in investing and capital raising
activities. Altogether, with this set of skills and credentials, this is the
right Board to guide and manage a publicly-traded oil and gas company in
making the necessary investments and capital allocation decisions to
capitalize on the high-return growth potential across its asset base.
THE TPG-AXON GROUP'S NOMINEES LACK RELEVANT EXPERIENCE NECESSARY TO LEAD YOUR
CEDING CONTROL TO THE TPG-AXON GROUP'S NOMINEES PLACES YOUR INVESTMENT AT RISK
In contrast to SandRidge's highly-qualified Board, the nominees TPG-Axon has
chosen are not familiar with the Company's operations and assets and five of
the seven nominees have no relevant oil and gas exploration and production
experience at all. Furthermore, the TPG-Axon Group's nominees possess almost
no relevant upstream energy experience, and specifically have no experience in
developing the Mississippian Lime or with today's horizontal drilling and
other oil and gas development techniques that are critical to SandRidge's
future growth plans. In short, the TPG-Axon Group is asking you to turn
control of the Company over to nominees who lack the expertise and strategic
plan necessary to create long-term value, placing your investment at risk.
NOW IS NOT THE TIME TO DISRUPT THE EXECUTION OF SANDRIDGE'S STRATEGIC PLAN
Your Board and management team has taken – and is committed to taking –
substantial steps to enhance performance and increase stockholder value going
forward. Don't give up your right to share in the superior value that the
current SandRidge team is poised to deliver over the long term.
Do not be misled by TPG-Axon, a New York-based hedge fund created by the
co-head of Goldman Sachs' proprietary trading department.
Please throw away the TPG-Axon Group's mailings;
Sign, date and return the enclosed SandRidge WHITE CONSENT REVOCATION CARD
Thank you for your support.
On Behalf of the Board of Directors of SandRidge Energy, Inc.:
Tom L. Ward
Chairman and Chief Executive Officer
Your Vote Is Important, No Matter How Many Shares You Own.
If you have questions about how to vote your shares on the WHITE CONSENT
or need additional assistance, please contact the firm assisting us in the
solicitation of consent revocations:
INNISFREE M&A INCORPORATED
Stockholders Call Toll-Free: (877) 717-3929
Banks and Brokers Call Collect: (212) 750-5833
We urge you NOT to sign any Green consent card sent to you by the TPG-Axon
ABOUT SANDRIDGE ENERGY:
SandRidge Energy, Inc. is an oil and natural gas company headquartered in
Oklahoma City, Oklahoma with its principal focus on exploration and
production. SandRidge and its subsidiaries also own and operate gas gathering
and processing facilities and CO2 treating and transportation facilities and
conduct marketing operations. In addition, Lariat Services, Inc., a
wholly-owned subsidiary of SandRidge, owns and operates a drilling rig and
related oil field services business. SandRidge focuses its exploration and
production activities in the Mid-Continent, Permian Basin, Gulf of Mexico,
West Texas Overthrust and Gulf Coast. SandRidge's internet address is
This communication may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties that may individually or mutually
impact the matters herein described for a variety of reasons that are outside
the control of the Company. Actual results could differ materially from those
discussed above. Important factors that could affect performance and cause
results to differ materially from management's expectations are described in
the sections entitled "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the Annual Report on Form
10-K for the year ended December 31, 2011, which was filed with the the SEC on
February 27, 2012, as updated on its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2012, filed on November 9, 2012, and as may
be further updated from time to time in the Company's SEC filings, which are
available through the web site maintained by the SEC at www.sec.gov. The
Company's forward-looking statements in this communication are based on
management's current views and assumptions regarding future events and speak
only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward looking statements, whether as a result of new
information, future events or otherwise, except as required by the federal
ADDITIONAL INFORMATION AND WHERE TO FIND IT
On January 18, 2013 the Company filed with the SEC a definitive consent
revocation statement in connection with the consent solicitation by TPG-Axon
Partners, LP, TPG-Axon Management LP, TPG-Axon Partners GP, L.P., TPG-Axon GP,
LLC, TPG-Axon International, L.P., TPG-Axon International GP, LLC, Dinakar
Singh LLC, Dinakar Singh, Stephen C. Beasley, Edward W. Moneypenny, Fredric G.
Reynolds, Peter H. Rothschild, Alan J. Weber and Dan A. Westbrook (the
"TPG-Axon Consent Solicitation"), and is mailing the definitive consent
revocation statement and a form of WHITE consent revocation card to each
stockholder of the Company entitled to execute, withhold or revoke consents
relating to the TPG-Axon Consent Solicitation. STOCKHOLDERS OF THE COMPANY
ARE URGED TO READ THE CONSENT REVOCATION STATEMENT, which is available now,
AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain a free copy of the consent revocation statement and
other documents (when available) filed with the SEC by the Company through the
website maintained by the SEC at www.sec.gov.
CERTAIN INFORMATION REGARDING PARTICIPANTS
The Company and certain of its directors and executive officers are
participants in the solicitation of consent revocations from the Company's
stockholders in connection with the TPG-Axon Consent Solicitation.
Stockholders may obtain information regarding the names, affiliations and
interests of the Company's directors and executive officers in the Company's
Annual Report on Form 10-K for the year ended December 31, 2011, which was
filed with the SEC on February 27, 2012, its Quarterly Reports on Form 10-Q
for the first three fiscal quarters of the fiscal year ending December 31,
2012, filed on May 7, 2012, August 6, 2012 and November 9, 2012, respectively,
and its definitive consent revocation statement, which was filed with the SEC
on January 18, 2013. These documents can be obtained free of charge through
the website maintained by the SEC at www.sec.gov.
SANDRIDGE ENERGY CONTACT:
Kevin R. White
Senior Vice President
SandRidge Energy, Inc.
123 Robert S. Kerr Avenue
Oklahoma City, OK 73102
+1 (405) 429-5515
^i Permission to use quotations neither sought nor obtained.
^ii Permission to use quotations neither sought nor obtained.
SOURCE SandRidge Energy, Inc.
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