This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

7 Things SandRidge Energy Doesn't Want You to Know

NEW YORK (TheStreet) -- SandRidge Energy (SD) just loves to surprise investors.

In fact, you could say the independent, highly levered exploration and production company is always one step ahead. Or, you could counter with the argument that it always seems to be two steps backward for every step forward with this company.

Case in point: The announcement on Thursday from SandRidge Energy that it was dipping its exploration and production toes into the water, literally, spending just under $1.3 billion to acquire mature, shallow water production assets in the Gulf of Mexico.

For an E&P company that has strategically targeted its opportunity in the land-based shale plays, including the Mississippian basin and the Permian, the move into offshore drilling and production caught investors by surprise. SandRidge shares dropped by 9% on Thursday as more than 50 million shares changed hands -- it averages trading of 12 million and hit the 43 million share volume mark by midday.

SandRidge goes offshore: one more surprise from a company full of surprises.

SandRidge made the case on a conference call with analysts on Thursday morning -- as its shares were being punished -- that it had to act while a valuable asset was being offered for cheap. Investors won't get the full picture from SandRidge, though, so here it is, laid out in 7 facts about this deal that aren't included in the company spin.

1. The price of this deal is fair, not cheap.
The privately held offshore company it acquired -- Dynamic Offshore Resources --- had filed to go public in 2011, backed by the Carlyle Group. Capital contributions to Dynamic from Carlyle and its partner Riverstone Holdings equaled roughly $200 million in the three years between 2008 and 2010, according published reports at the time of the S-1 filing.

Seems like the real cheap deal went, as usual, to the private equity players, turning a few hundred million into close to $1.3 billion payday.

Why didn't the company end up waiting to go public after it filed in late 2011? Because SandRidge ended up paying just under the targeted IPO value. So why take the risk -- during the period of time it takes to dot all the "i's" and cross all the "t's" required of an IPO filing -- of a potential fall in crude oil prices caused by a global economic slowdown, which could dampen enthusiasm for the offering?

As far as SandRidge's take that it was an offer the company couldn't refuse, analysts say SandRidge paid a value that is equal to recent deals in the Gulf of Mexico. That means it wasn't cheap, but simply in line with peer comps.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,086.63 -26.91 -0.16%
S&P 500 1,987.01 +3.48 0.18%
NASDAQ 4,473.6970 +17.6810 0.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs