SandRidge Energy, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Sandwich Energy third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then one on your telephone keypad. Please be advised today's conference is being recorded, and if you require any further assistance, please press star zero. I would now like to hand the conference over to David Zhu, Director of Finance. Thank you. Please go ahead.

Thank you and welcome, everyone. With me today are Carl Giesler, our CEO, Salah Ghamoudi, our CFO, and Grayson Pranin, our VP of Engineering and Reservoir, as well as other members of management. We would like to remind you that today's call contains forward-looking statements and assumptions which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. We may also refer to adjusted EBITDA and adjusted G&A and other non-GAAP financial measures. Reconciliations of these measures can be found on our website.

Thank you and good morning. Our earnings released yesterday, as well as 10Q that we will file later today, both provide substantive detail on our financial and operating performance during the third quarter. Accordingly, as usual, we'll keep our prepared marks brief. We've seen a lot of our hard work over the last six months come together in this third quarter, starting with HSE, despite sharp personnel reductions, substantial outsourcing, numerous well adjustments in response to volatile commodity prices and other distractions, the company's streak without a recordable incident stands at 26 months and counting, quite a remarkable feat. From a debt and liquidity perspective, our financial position became considerably stronger during the quarter. We ended 3Q with less than $1 million net debt. versus more than $45 million the previous quarter. And at the beginning of this week, we had approximately $16 million of cash on hand versus debt of $12 million. This substantial deleveraging reflects not only the approximately $35 million proceeds from the sale of our headquarters building, but also the significant cost and capital efficiencies implemented by our team. From a production and financial performance perspective, the Small Ball and Capital Efficient Workover Program and cost curtailment initiatives that we implemented over the last six months have become evident in our results. Yesterday's earnings release again reaffirmed our 2020 guidance from May. We're increasingly confident that we should achieve and, on several metrics, better those targets. We held production steady this quarter with 22.3 MBOE a day compared to 23.6 MBOE a day in the prior quarter. At this point in the year, we should approach, if not surpass, 8.2 billion BLE high end of the 2020 guidance from May. LOE continues to fall, coming in at $8.1 million, or $3.94 per BOE, compared to just under $9 million and just over $4 per BOE in the prior quarter. We believe our per BOE LOE compares favorably with almost all our public small capital and gas peers. Looking to year end, we should have a good chance to be meaningfully below the $48 million low end of the 2020 LOE guidance from May. Adjusted G&A similarly continues to fall, coming in at $2.3 million or $1.11 per BOE, compared to $3.7 million or $1.74 per BOE in the prior quarter. As with LOE, we believe our per BLE adjusted GMA stacks up well against almost all our public small cap oil and gas peers. For the year, we should be able to land safely within the $11 million to $15 million range of 2020 adjusted GMA guidance for May. Finally, on the financial front, adjusted GMA came in at $15.4 million, rebounding approximately 75% from the prior quarter. From a corporate structure perspective, the company is becoming simpler. We closed on the acquisition of the overriding royalty interest held by Sandridge Mississippi & Trust II for a net purchase price of $3.3 million. We have one remaining affiliated trust, Sandridge Mississippi & Trust I, left. That trust has announced that, per the agreement given to the trust, it will need to commence winding up this month. Finally, from a strategic perspective, due to our building sale, cost efficiencies, and capital discipline, we now find ourselves in the happy position of being one of the few, if not the only, small-cap, publicly traded gas-oriented oil and gas companies transitioning to an increasing net cash positive balance. This position affords us the benefits of time and patience, as well as wide strategic birth. will continue to evaluate adding assets with a focus on those with high PDP weighting that we believe we can acquire in an equity value accretive manner, as well as divesting assets that no longer align with our strategic direction. We'll also assess returning capital to shareholders, ensuring we do it in a financially prudent and economically efficient manner. We'll now open the call to questions.