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SandRidge Energy Management Discusses Q2 2012 Results - Earnings Call Transcript

Please note that this call's intent is to discuss SandRidge Energy and not our Royalty Trust. The trust will be addressed on separate calls on August 10. Also SandRidge will file its 10-Q on Monday, August 6.

Now let me turn the call over to Tom Ward.

Tom L. Ward

Thank you, James. Welcome to our second quarter operational update. As you've read, we announced another very solid performance this quarter, driven by the growth in oil production. The key themes I will discuss this morning that differentiate SandRidge are as follows: low-risk shallow carbonate drilling with low cost; willingness to lock in future profits through hedging; and our increasing balance sheet strength.

The SandRidge management team has operated differently than most of our peers over the last few years. We've built our foundation on shallow, conventional, low-risk well assets. The Central Basin Platform in the Permian Basin is a good example. In 2008, we produced 4,000 barrel of oil equivalent per day from this area. And we -- and today, we produce over 30,000 net barrel of oil equivalent per day from shallow carbonate vertical wells.

The Central Basin Platform continues to provide repeatable, low-risk, high rate of return drilling opportunities. Even though the wells only average 53 barrels of oil equivalent per day during the 30-day peak period, the low cost associated with the drilling and completion of these wells make them very attractive investments and efficient use of capital. By buying in an area of with a long history of production, we not only lowered our drilling risk but also do not have the issues with takeaway capacity as others experienced in newer, more crowded areas of the Permian. This last quarter, we drilled 206 Central Basin Platform wells and plan to continue with this program into the future and maintain a 10-year inventory of drilling locations.

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