SandRidge Energy, Inc. Sends Letter To Stockholders
Recommends Stockholders Support Current Highly Qualified Board and Reject the
TPG-Axon Group's Nominees and Proposals
OKLAHOMA CITY, Feb. 20, 2013
OKLAHOMA CITY, Feb. 20, 2013 /PRNewswire/ -- SandRidge Energy, Inc. (the
"Company" or "SandRidge") (NYSE: SD) today sent a letter urging stockholders
to support the Company's highly qualified Board and reject the TPG-Axon
Group's nominees by signing, dating and returning SandRidge's WHITE consent
Included below is the full text of the letter to SandRidge stockholders:
February 20, 2013
Dear Fellow Stockholder:
PROTECT YOUR INVESTMENT IN SANDRIDGE ENERGY
PLEASE SIGN, DATE AND RETURN THE WHITE CONSENT REVOCATION CARD TODAY
Your support of SandRidge Energy and its Board is critical to the continued
execution of our strategy to capitalize on SandRidge's leading position in the
Mississippian Lime and deliver long-term value for our stockholders. New
York-based hedge fund TPG-Axon has engaged in a false and misleading campaign
in an attempt to replace your experienced Board. If successful, TPG-Axon's
proposals would turn control of your Company over to a new Board of Directors
nominated exclusively by TPG-Axon without providing you with any control
premium for your shares.
TPG-Axon has yet to put forth a thoughtful plan to create value for
stockholders. Giving their nominees control would place your investment at
risk by disrupting the execution of our strategic plan. Don't let TPG-Axon
remove SandRidge's independent and highly qualified directors who are focused
on serving all of the Company's stockholders. We urge you to take no action
with respect to TPG-Axon's consent solicitation other than to sign, date and
return the enclosed WHITE consent revocation card.
It's important to note that one of the nation's leading independentproxy
advisory firms, Egan-Jones Proxy Services ("Egan-Jones"), recently recommended
that SandRidge stockholders support the Company's current Board of Directors.
In arriving at its recommendation, Egan-Jones considered a number of factors,
including "[its] belief that the dissidents have provided no specific plans
and no substantive new ideas or valid reasons to change the Company's
strategic direction that will enhance the Company's stockholder value."
Without a specific plan, TPG-Axon's nominees will jeopardize your investment.
SANDRIDGE HAS THE RIGHT STRATEGY TO CREATE VALUE FOR ALL STOCKHOLDERS
Your Board has taken decisive steps over the last few years to transition the
Company to an oil focused producer with a leading position in the
Mississippian play – among the most profitable basins in the U.S. With
approximately 1.85 million net acres and 600 wells drilled, SandRidge controls
the largest acreage position in the Mississippian and operates 45% of all
wells drilled in the play. Since January 2010, the Company has invested $500
million in the acquisition of leaseholds and over $1.7 billion in drilling
capital and infrastructure – positioning SandRidge as the most efficient
operator in the play and enhancing the value creation potential of these
Your Board's actions in transitioning the Company from natural gas, which has
seen drastic price declines, to more oil-based production and in making these
critical investments in the Mississippian, have positioned the Company for
significant growth. Even TPG-Axon has acknowledged in its public commentary
that the Company's Mississippian assets "have tremendous value and potential."
As a result of our methodical investment strategy focused on the play, our
average net production in the area grew to 30.2 Mboe/d in the third quarter of
2012, an increase of 18x from the third quarter of 2010. Importantly, oil
accounts for approximately 45% of the production volume and approximately 80%
of cash flows in the Mississippian.
With over 11,000 future drilling locations, we expect our position in the
Mississippian to support development over the next 18 years. In support of
this growth, we drilled 396 wells in 2012 and expect to drill 581 wells in
2013 while increasing the number of rigs from 32 today to 41 in 2013. Through
actions such as the announced sale of our Permian assets, we are increasing
our cash and liquidity position, providing us with a stronger balance sheet
and the ability to fund capital expenditures to create value in the
Unlike the nominees proposed by TPG-Axon who lack relevant experience, your
Board and management team have a clear plan and the necessary expertise to
maximize value based on the strength of our Mississippian position. Do not
disrupt the Board and management's momentum. Do not give up your right to
benefit from the value that the current SandRidge team is poised to deliver
over the long-term.
DON'T BE FOOLED BY TPG-AXON'S FALSE AND MISLEADING CAMPAIGN
TPG-Axon simply does not have the facts straight. Their campaign and "consent
solicitation" is based on false, misleading and inflammatory statements
regarding management, the Board and the Company – statements that are designed
to distract you from the truth.
Specifically, TPG-Axon has made a number of allegations regarding the
Company's transactions with WCT Resources. The Board, however, has found no
evidence of wrongdoing. Some important facts ignored by TPG-Axon are:
oWCT Resources is an independent company – no person affiliated with
SandRidge has any control over WCT Resources' activities;
otransactions between WCT Resources and SandRidge have been thoroughly
reviewed and approved in advance by disinterested Board members in
accordance with Company policy; and
othe Company has disclosed related party transactions in its public
filings, as appropriate.
Do not allow a short-term focused hedge fund manager to distort your views of
TPG-Axon has also made a number of misleading statements regarding the
Company's performance and strategy. The facts are:
oSandRidge has exceeded analyst consensus
estimates for EBITDA in three of the last four
quarters and for EPS in each of the last five
Financial Performance quarters.
oSandRidge's estimates of returns for
Mississippian wells have been consistent with
oSandRidge's focus on improving its financial
position has brought its cost of capital below
its peers [i] (9.9% for SandRidge vs. 10.9% for
Financial Strength peers[ii]).
oThe Company's net debt-to-EBITDA, a measure used
by the Company's lenders, declined to below 2.0x
in the third quarter of 2012 pro forma for the
oTom Ward, SandRidge's CEO, personally invested
Management Alignment over $600MM in SandRidge between 2006 and 2007
and still owns ~5.0% of the Company.
oThe Company has clearly articulated and
successfully executed a shift from natural gas
Clear Strategic Direction oSandRidge's thoughtful approach to managing its
asset base has resulted in the leading position
in the high-growth Mississippian with a balance
sheet and financial strength to support growth
and deliver stockholder value.
TPG-AXON'S NOMINEES LACK THE RELEVANT EXPERIENCE TO SERVE ON THE SANDRIDGE
TPG-Axon is asking you to turn control of the Company over to its slate of
seven hand-picked nominees – five of whom have no relevant oil and gas
exploration and production experience at all.
TPG-Axon Nominee Relevant Oil and Gas Exploration and Production
Dinakar Singh None
Board member since 2010 of BPZ Resources, Inc., a small
Stephen C. Beasley oil and gas company operating in South America with a
market capitalization of under $350 million.
Edward W. Moneypenny Prior to 2001, CFO and director of Oryx Energy
Corporation, an oil and gas company.
Fredric G. Reynolds None
Peter H. Rothschild None
Alan J. Weber None
Dan A. Westbrook None
YOUR BOARD IS THE RIGHT TEAM TO LEAD THE COMPANY
Horizontal drilling in the Mississippian is a complex undertaking requiring
deep expertise in the sophisticated techniques necessary to support efficient
production. Your Board has that expertise. Your Board had the foresight to
be a first-mover in entering the Mississippian and making the necessary
investments to support the infrastructure development that is critical to
driving future production growth, returns and value creation.
Company Director Oil and Gas Industry Experience
Over 30 years' experience in oil and gas exploration and
development; a recognized leader in the Mississippian
Tom L. Ward Lime play; Chief Executive Officer and Chairman of the
Board of the Company from 2006 to present; prior to 2006,
Chief Operating Officer and Co-Founder of Chesapeake
Energy; degree in Petroleum Land Management.
Over 30 years' experience in the oil and gas industry;
Jim J. Brewer Co-Founder and President of J-Brex Company, a private oil
and gas and real estate company; degree in geology;
member of the Board since 2011.
Owner of oil and gas properties and experience in oil and
Everett R. Dobson gas leasing of interests; member of the Board since
Managing partner of Gillco Energy, L.P., a private
partnership with significant investments in oil and gas
William A. Gilliland assets; significant experience with oil and gas assets in
the Austin Chalk, Woodbine, Woodford Shale, and
Mississippian Lime formations; member of the Board since
Over 30 years' experience in the oil and gas industry;
officer of Riata Energy, SandRidge's predecessor; Founder
Daniel W. Jordan of Jordan Drilling Fluids, Inc. and Anchor Drilling
Fluids USA Inc., the largest privately held domestic
drilling fluids firm; member of the Board since 2006.
Long time investor in energy and energy services
Roy T. Oliver, Jr. businesses; Founder and President of U.S. Rig and
Equipment, Inc. for over 20 years; member of the Board
Senior partner in the Private Equity Group of Ares
Management LLC, and management of Ares' investments in
Jeffrey S. Serota oil and gas industry; director of EXCO Resources, Inc. an
oil and gas exploration company; member of the Board
PROTECT YOUR INVESTMENT IN SANDRIDGE BY SIGNING AND RETURNING THE WHITE
CONSENT REVOCATION CARD IN SUPPORT OF THE CURRENT BOARD
Don't be misled by TPG-Axon's aggressive campaign to turn a quick profit at
the expense of investors who care about generating long-term value. Your
Board and management team are committed to taking substantial steps to enhance
performance and increase stockholder value, and are best suited to act in the
best interest of all SandRidge stockholders. Your support is critical to
ensuring that SandRidge can continue building on its momentum.
Please promptly sign, date and return the enclosed WHITE consent revocation
We thank you for your continued support.
THE BOARD OF DIRECTORS OF SANDRIDGE ENERGY, INC.
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
REVOCATION CARD, 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 card sent to you by TPG-Axon.
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 Securities
and Exchange Commission (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 securities laws.
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 has mailed the definitive consent
revocation statement and a form of WHITE consent revocation card to
stockholders 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] Peers include: Berry Petroleum Co., Continental Resources, Inc., Concho
Resources, Inc., Halcon Resources Corporation, Laredo Petroleum Holdings,
Inc., Newfield Exploration Co., Oasis Petroleum Inc., Pioneer Natural
Resources Co., Plains Exploration & Production Company and Whiting Petroleum
[ii] Weighted Average Cost of Capital based on Bloomberg data as of January
[iii] Based on information contained in the definitive consent statement on
Schedule 14A filed by the TPG-Axon Group with the SEC on January 18, 2013.
SOURCE SandRidge Energy, Inc.
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