When SandRidge signs a joint venture agreement, as it has with companies like Repsol and Atinum, there is benefit for SandRidge stockholders. The Company and its stockholders bear the initial expense and overhead of identifying opportunities. However, the partners then pay a premium to the Company for a share of the land, and share in the expense of developing the land.
On the other hand, if in fact, family-controlled entities have gained information and advantage through the relationship with Mr. Ward and SandRidge, then by contrast, the situation with WCT Resources and other Ward family entities is remarkably advantageous for them. In such circumstances, SandRidge would bear the expense of huge overhead, which presumably would help in identifying attractive opportunities while WCT Resources would appear to reach that same result with little overhead spending or resources. SandRidge would also, in such circumstances, bear the cost of drilling to prove whether the land was valuable or not. If it was valuable, WCT Resources would benefit from having adjacent land, even without having borne that cost.
“Just like the earlier Executive Well Participation Plan program, which Mr. Ward benefitted handsomely from, there would be an unfair sharing of risk and reward. However, at least with the Executive Well Participation Plan, the Company disclosed its existence, albeit to a limited degree. In this case, by adopting the view that WCT Resources is an ‘independently managed company,’ SandRidge has avoided any disclosure of the significant potential for conflict of interest and unfair gain for the Ward family,” said TPG-Axon.
The Board's response also ignores a number of the other inconvenient facts and questions pointed out in TPG-Axon’s presentation. Most notably, in its response, the Board does not address any of the other persons or entities related to Mr. Ward that appear frequently alongside SandRidge in the acquisition of land and mineral rights, including 192 Investments and Sch’ree Ward. Are stockholders to believe that those occurrences are also simply coincidences?