NEW YORK (TheStreet) -- SandRidge Energy Inc. (SD) - Get Report announced on Thursday morning that it has commenced a private offering of $1 billion in aggregate principal amount of senior secured notes, which will be due in 2020.

Shares of SandRidge Energy are down by 3.72% to $1.16 on heavy volume in early afternoon trading on Thursday.

"The notes will be secured on a second lien priority basis and guaranteed by each of the company's restricted subsidiaries that will guarantee the company's revised revolving credit facility," SandRidge said in a statement.

"The issuance of the notes will be conditioned on, among other things, the effectiveness of a fully-committed revised $500 million borrowing base first lien revolving credit facility," the company added.

"It's not surprising that SandRidge is issuing second-lien debt given that they amended their credit agreement earlier this year to allow them to do that," said BloombergIntelligence analyst Spencer Cutter.

"Not only does it get them some additional capital and liquidity, but you're also swapping out borrowing-base liquidity -- which is subject to revisions every few months -- to a bond that, once issued, it's issued," Cutter added.

So far today, 15.13 million shares of SandRidge Energy have exchanged hands as compared to its average daily volume of 14.55 million shares.

SandRidge is an Oklahoma City, OK.-based oil and natural gas company that focuses on exploration and production activities in the mid-continent region of the U.S.

Separately, TheStreet Ratings team rates SANDRIDGE ENERGY INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SANDRIDGE ENERGY INC (SD) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 659.1% when compared to the same quarter one year ago, falling from -$136.34 million to -$1,034.95 million.
  • The debt-to-equity ratio is very high at 3.76 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SD has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANDRIDGE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $90.10 million or 0.39% when compared to the same quarter last year. Despite a decrease in cash flow of 0.39%, SANDRIDGE ENERGY INC is still significantly exceeding the industry average of -53.34%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 82.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 606.45% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: SD Ratings Report