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Oil and natural gas company, SandRidge Energy Inc. (SD - Snapshot Report) plans to strengthen its position in the Mississippi Lime formation by drilling an additional 100 wells in 2014. The company projects an investment of $350 million, which also includes development of necessary infrastructure.

This large-scale drilling program, indicating SandRidge’s interest in the Kansas assets, is in contrast to the decisions of other major oil exploration companies like Royal Dutch Shell (RDS.A - Analyst Report). The European oil giant quit the Kansas area of the Mississippian Lime play in September – divesting 45 producing wells – as drilling activity did not seem viable.

The porous lime formation – spread across areas of northern Oklahoma and western and southern Kansas – was thought to have exhausted its potential. However, using techniques like hydraulic fracturing (fracking) and horizontal drilling, the resources have been rediscovered. This proved to be fruitful for some of the companies that remained. SandRidge Energy was the one to popularize horizontal drilling in the region in 2010.

The Oklahoma-based firm has 170 producing wells in Kansas. The company’s initial aggressive drilling program had ended with mixed results. However, after the shareholder revolt last spring, the new management took a more calculated move and carefully examined the areas before drilling.

SandRidge has tasted success in south-central and southwest Kansas and plans to have 6 operational rigs next year. Shedding some leases, the company plans to switch focus on areas that hold greater potential.

Energy exploration and production-focused SandRidge Energy currently holds a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

Apart from SandRidge, one can also consider other stocks in the energy sector like Abraxas Petroleum Corp. (AXAS - Snapshot Report) and Matador Resources Company (MTDR - Snapshot Report) as good investment opportunities. Both these stocks currently sport a Zacks Rank #1 (Strong Buy).
 

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