NEW YORK ( TheStreet) -- On a Thursday during which the energy sector bled, shares of SandRidge Energy ( SD) were among the energy sector outliers, turning in a big winning day, up 4%. Trading action was heavy in SandRidge shares, with more than 17 million shares changing hands, or almost twice its average daily volume.
SandRidge Energy's big winning day should be viewed in contrast to the big losing day the energy company suffered in November, when it announced a capital spending plan for 2011 that would balloon from $875 million to $1.1 billion, the company commenced a $250 million preferred note offering, and the SandRidge CFO left. On November 5, more than 68 million shares of SandRidge were traded.
On Thursday, SandRidge hired a new CFO and announced the closing of an asset sales of $155 million. The biggest move of all, though, may have been the announcement made late on Wednesday by SandRidge that it was pursuing an unconventional asset financing plan, in which it would offer up to $287.5 million in a royalty trust on some of its Mississippian assets. Investors in the trust will receive a percentage of proceeds from producing wells and development wells to be drilled by SandRidge on approximately 42,600 net acres in the Mississippian formation in northern Oklahoma. Earlier this year, it was better-than-expected results from the same Mississippian assets featured in the royalty trust that led to a surge in SandRidge shares.
Thursday's news helped to continue turning the tide back in favor of the company -- it was well up from its lows already as the energy sector rallied to end 2010 -- by removing the risk that the energy company would need to raise capital and dilute existing shareholders through future common stock offerings. SandRidge shares ended Thursday at their highest price since April, closing at $7.85. The royalty trust approach is a complex financial arrangement, not uncommon in the energy sector but certainly not as prevalent as traditional debt or equity. Still, it can be boiled down to this one critical point: SandRidge gets cash upfront in the $287.5 million offering by giving up the right to future cash flow for producing and development assets.