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SandRidge Upgraded to Outperform on Growth, Balance Sheet Strength
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SandRidge Energy (SD - Free Report) has been upgraded to “Outperform” as its operational momentum and disciplined cost structure provide resilience against commodity volatility. In the second quarter of 2025, production averaged just under 18 MBoe per day, representing a 19% year-over-year increase in total volumes and a 46% rise in oil output.
The company’s first Cherokee development well delivered a robust 2,300 Boe per day initial production rate with 49% oil, reinforcing confidence in reservoir quality and supporting the multi-year growth potential of its acreage. Cost discipline remains a central strength. Adjusted G&A fell to $2.4 million, or $1.48 per Boe, from $1.85 per Boe in the prior year.
Lease operating expenses also declined meaningfully, reflecting efficiency gains and advantages from SandRidge’s integrated infrastructure. With breakeven levels around $35 WTI for new wells, the company is positioned to sustain development even if oil prices soften from current levels.
Improving Natural Gas Leverage
While oil markets have faced headwinds, SandRidge has benefited from a recovery in natural gas prices. Realized natural gas pricing in the second quarter was $1.82 per Mcf, an improvement from earlier levels in the year.
The company’s diversified portfolio provides flexibility, with oil-weighted Cherokee wells generating attractive returns in stable crude environments and gas-weighted legacy properties poised to benefit from firmer Henry Hub pricing. Management has emphasized that higher sustained gas prices will support additional reactivations and optimization projects, providing the company with further resilience against fluctuations in a single commodity.
Balance Sheet Strength & Shareholder Returns
The strength of SandRidge’s balance sheet further underpins the upgrade. At the end of the second quarter, the company held more than $104 million in cash, equal to $2.80 per share, and carried no debt.
The adjusted operating cash flow reached $26 million for the quarter, enabling the generation of $10 million in free cash flow despite elevated capital expenditure related to the Cherokee program.
With negative net leverage and $1.6 billion in federal net operating losses providing a significant tax shield, SandRidge can reinvest in growth while continuing to return capital to shareholders. Since the beginning of 2023, dividends paid out totaled $4.36 per share, including special distributions, and the regular dividend was raised by 9% in August 2025. The company also repurchased approximately $6 million worth of stock for the first half of 2025, with $69 million remaining under its current authorization.
Outlook & Investment View
SandRidge projects exit production rates above 19 Mboe per day by year-end, with additional completions slated to carry momentum into 2026. Even in a mid-$60s WTI environment, the combination of robust production growth, improved natural gas leverage, and a cash-rich, debt-free balance sheet reduces cyclicality risk and supports a durable investment case.
The upgrade to Outperform reflects confidence that SandRidge is positioned not only to weather commodity price swings but also to deliver meaningful shareholder value through its operational execution and financial discipline.
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SandRidge Upgraded to Outperform on Growth, Balance Sheet Strength
SandRidge Energy (SD - Free Report) has been upgraded to “Outperform” as its operational momentum and disciplined cost structure provide resilience against commodity volatility. In the second quarter of 2025, production averaged just under 18 MBoe per day, representing a 19% year-over-year increase in total volumes and a 46% rise in oil output.
The company’s first Cherokee development well delivered a robust 2,300 Boe per day initial production rate with 49% oil, reinforcing confidence in reservoir quality and supporting the multi-year growth potential of its acreage. Cost discipline remains a central strength. Adjusted G&A fell to $2.4 million, or $1.48 per Boe, from $1.85 per Boe in the prior year.
Lease operating expenses also declined meaningfully, reflecting efficiency gains and advantages from SandRidge’s integrated infrastructure. With breakeven levels around $35 WTI for new wells, the company is positioned to sustain development even if oil prices soften from current levels.
Improving Natural Gas Leverage
While oil markets have faced headwinds, SandRidge has benefited from a recovery in natural gas prices. Realized natural gas pricing in the second quarter was $1.82 per Mcf, an improvement from earlier levels in the year.
The company’s diversified portfolio provides flexibility, with oil-weighted Cherokee wells generating attractive returns in stable crude environments and gas-weighted legacy properties poised to benefit from firmer Henry Hub pricing. Management has emphasized that higher sustained gas prices will support additional reactivations and optimization projects, providing the company with further resilience against fluctuations in a single commodity.
Balance Sheet Strength & Shareholder Returns
The strength of SandRidge’s balance sheet further underpins the upgrade. At the end of the second quarter, the company held more than $104 million in cash, equal to $2.80 per share, and carried no debt.
The adjusted operating cash flow reached $26 million for the quarter, enabling the generation of $10 million in free cash flow despite elevated capital expenditure related to the Cherokee program.
With negative net leverage and $1.6 billion in federal net operating losses providing a significant tax shield, SandRidge can reinvest in growth while continuing to return capital to shareholders. Since the beginning of 2023, dividends paid out totaled $4.36 per share, including special distributions, and the regular dividend was raised by 9% in August 2025. The company also repurchased approximately $6 million worth of stock for the first half of 2025, with $69 million remaining under its current authorization.
Outlook & Investment View
SandRidge projects exit production rates above 19 Mboe per day by year-end, with additional completions slated to carry momentum into 2026. Even in a mid-$60s WTI environment, the combination of robust production growth, improved natural gas leverage, and a cash-rich, debt-free balance sheet reduces cyclicality risk and supports a durable investment case.
The upgrade to Outperform reflects confidence that SandRidge is positioned not only to weather commodity price swings but also to deliver meaningful shareholder value through its operational execution and financial discipline.