SandRidge falls on shareholder letter, asset sale
NEW YORK (AP) — Shares of SandRidge Energy Inc. fell Friday after CEO Tom Ward said a plan to sell assets in the Permian Basin was being considered before a shareholder called for his resignation.
THE SPARK: TPG-Axon Capital, which owns more than 4.5 percent of SandRidge's outstanding shares, wrote in a letter delivered to SandRidge Thursday that the oil and gas producer's stock has performed poorly and the market has lost confidence in the company's management.
To improve shareholder value, the investment firm said Ward should resign because his credibility "is too damaged to continue in his role." TPG-Axon also said some board directors should be replaced and the board should hire an adviser to explore alternatives.
During a conference call with analysts Friday, Ward said the decision to sell assets in the Permian Basin has been under consideration for some time and was not a reaction to the letter.
THE BIG PICTURE: The situation with TPG-Axon rose as SandRidge reported a loss of $184 million, or 39 cents per share, in the July-through-September quarter. That compares with net income of $561 million, or $1.16 per share in the year-ago quarter.
Revenue rose to $532.8 million from $363.8 million.
Excluding one-time charges, SandRidge reported adjusted earnings of $29.6 million, or 5 cents per share.
Analysts surveyed by FactSet, on average, predicted break-even results on a per-share basis and revenue of $532.9 million. Such estimates typically exclude one-time items.
THE ANALYSIS: Stifel Nicolaus analyst Amir Arif reduced his price target to $8.50 from $10 per share.
He said the company's initial 2013 production guidance of 39.2 million barrels of oil equivalent was disappointing because it indicated more growth in natural gas volumes.
Arif told clients in a research note that he considered the Permian asset sale plan to be positive because it would add to earnings before interest, depreciation and amortization.
SHARE ACTION: Shares of SandRidge Energy fell 22 cents, or 3.6 percent, to $5.88 in afternoon trading. The price has ranged from $5.55 to $9.04 per share in the past 52 weeks.