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SandRidge May Sell 500,000 More Acres Worth $1.83 Billion

Dec. 23 (Bloomberg) -- SandRidge Energy Inc., which said yesterday it would sell a stake in a Kansas and Oklahoma oil and natural-gas prospect to Repsol YPF SA, is seeking to divest another 500,000 acres that may be worth $1.83 billion.

Holdings in the Mississippian deposit may be put in a royalty trust or sold to a joint-venture partner, Tom Ward, chairman and chief executive officer of the Oklahoma City-based company, said during a conference call today.

The company has gotten about $1.83 billion from selling 500,000 net acres in the Mississippian, Ward said. That includes 364,000 net acres that Madrid-based Repsol agreed to buy for $250 million in cash and another $750 million in drilling costs.

The Mississippian prospect covers 17 million acres in Kansas and Oklahoma. SandRidge has 195 horizontal wells in the area, 92 percent of the industry’s total, according to a company presentation. It estimates wells that use the sideways-boring technique will yield 300,000 barrels to 500,000 barrels of oil and gas.

SandRidge spent about $350 million for drilling rights on 2 million acres in the area during the last two years. It now holds 1.5 million acres in the formation and is done buying leases in the area, Ward said.

“We’d feel most comfortable with owning closer to 1 million acres,” he said. The company will double production, triple earnings before taxes, depreciation and amortization and reduce debt in three years by selling assets, he said.

Ram, Chesapeake

Earlier this year, SandRidge raised $338.7 million selling stakes in a royalty trust and sold Mississippian acreage stakes to an affiliate of Seoul-based Atinum Partners Co. for $250 million in cash and $250 million in drilling costs.

SandRidge rose 4.4 percent to $8.57 at the close in New York, after gaining 23 percent yesterday when the Repsol agreement was announced.

Ram Energy Resources Inc., another holder of Mississippian leases, rose 23 percent to $2.47, the highest price in more than three years. It has more than doubled in two days after announcing a $550 million cash injection from an investor group led by former Petrohawk Energy Corp. CEO Floyd C. Wilson.

Chesapeake Energy Corp., which said Nov. 4 it’s seeking a joint-venture partner for its 1.4 million Mississippian acres, may benefit from rising interest in the area, Michael Hall, a Denver-based analyst for Robert W. Baird & Co., wrote in a note to clients today.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net

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