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SandRidge admits bankruptcy an option, 'no assurances' it can continue

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Essential Energy Insights - September 2021


SandRidge admits bankruptcy an option, 'no assurances' it can continue

Facedwith crippling debt and searching for options, admitted in itsannual report March 30 that it could be headed for Chapter 11 bankruptcy.

The company,which had previously requested extra time to file the report, said the oil andgas price collapse, coupled with its holdings in the unprofitable MississippianLime play, left it in financial peril.

"Asa result of the impacts to the company's financial position resulting fromdeclining industry conditions and in consideration of the substantial amount oflong-term debt outstanding, the company has engaged advisors to assist with theevaluation of strategic alternatives, which may include, but not be limited to,seeking a restructuring, amendment or refinancing of existing debt through aprivate restructuring or reorganization under Chapter 11 of the BankruptcyCode," SandRidge said. "However, there can be no assurances that thecompany will be able to successfully restructure its indebtedness, improve itsfinancial position or complete any strategic transactions. As a result of theseuncertainties and the likelihood of a restructuring or reorganization,management has concluded that there is substantial doubt regarding the company'sability to continue as a going concern as it is currently structured."

"Ifthe company does not obtain a waiver of this requirement or otherwise cure thisevent within 30 calendar days of the issuance of these financial statements,the lenders under the senior credit facility will be able to acceleratematurity of the debt," SandRidge said. "Any acceleration of theobligations under the senior credit facility would result in a cross-defaultand potential acceleration of the maturity of the Company's other outstandinglong-term debt. These defaults create additional uncertainty associated withthe Company's ability to repay its outstanding long-term debt obligations asthey become due and further reinforces the substantial doubt over the Company'sability to continue as a going concern."

SandRidge reported a net loss of $653.7 million for thefourth quarter of 2015 and approximately $3.7 billion for the full year.