SandRidge Energy Announces Sale Of Gulf Of Mexico Business To Fieldwood Energy

(RTTNews) - SandRidge Energy Inc. (SD) announced the sale of its Gulf of Mexico business, which comprises all of the company's Gulf of Mexico and Gulf Coast properties, to Fieldwood Energy LLC, for $750 million of cash and the assumption of $370 million of abandonment liabilities and subject to customary purchase price adjustments.

SandRidge said it will also retain a 2.0% overriding royalty interest in certain exploration prospects. The proceeds are expected to be reinvested over time in the company's Mid-Continent drilling projects. The company also announced revised guidance for 2014, including production growth of 26% in 2014, an increase from the previous guidance of 12% growth.

In 2014, the company said it will redeploy the capital expenditures that were previously allocated to Gulf of Mexico development into its Mid-Continent assets. The company plans to add three additional rigs during the second quarter of the year, resulting in the drilling of about 30 additional gross wells compared to the previous budget.

The company noted that it now expects to exit 2014 with 29 rigs operating in its Mid-Continent acreage, where it continues to discover, delineate and develop new, high rate-of-return opportunities.

The company updated 2014 guidance provided on November 5, 2013 to adjust for the impact of the divestiture. The company expects to produce 29.3 MMBoe in 2014, which includes 1.0 MMBoe of production from Gulf of Mexico assets prior to the closing of the transaction. This compares to pro-forma 2013 estimated production of 22.4 MMBoe, after adjusting for divested Gulf of Mexico and Permian properties, and results in 26% organic year-over-year production growth.

The company anticipates capital expenditures of $1.475 billion in 2014. The redeployment of offshore capital expenditures is expected to result in 2014 production of 23.2 MMBoe in the Mid-Continent, representing production growth of 37% over estimated 2013 levels.

The transaction is expected to close during the first quarter of 2014, subject to customary closing conditions and will have an effective date of December 1, 2013. RBC Richardson Barr acted as financial advisor to the company in connection with the transaction.