SandRidge Energy, Inc.

Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to Sandridge Energy's first quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. Scott Prestridge, Director of Finance and Investor Relations, You may begin your conference.

Thank you and welcome, everyone. With me today are Grayson Pranin, our CEO and COO, Shilas Gavridi, our CFO and CAO, as well as Dean Parrish, our SVP of Operations. 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 GNA and other non-GAAP financial measures. Reconciliations of these measures can be found on our website. With that, I'll turn the call over to Grayson. Thank you, and good morning. I'm proud to report on another strong quarter result for the company and that the company remains well-positioned to capitalize and Recent Commodity Price Selwyn to include focused high-graded drilling in the core of the northwest DAC and a continuation of our well reactivation, which will add incremental production this year. Before expanding on this, Bob will touch on a few highlights from the first quarter.

Thank you, Grayson. Despite us having no drilling or completion activity during the past year, we were able slightly increased 1Q21 to 1Q22 production, averaging 17.5 MBOE per day and 17.8 MBOE per day in the mid-con over their respective periods. The production for the quarter, as well as the last year, benefited from the reactivation of over 139 wells that were previously curtailed during commodity price downdrafts in 2020. Net cash, including restricted cash, increased to approximately $166 million, which represents $4.51 per share of our common stock issued and outstanding as of March 31, 2022. The approximate $26 million increase over the quarter was supported by production from our well reactivation program, as well as higher commodity prices and realizations, a net of approximately $5 million in pre-purchases of materials related to our 2022 capital program. The company has no term debt or revolving debt obligations as of March 31, 2022, and continues to live within cash flow, funding all of its capital expenditures with organic free cash flow and cash held on the balance sheet. Over the quarter, the company generated adjusted EBITDA of approximately $39 million, again, despite no new drilling or completion activities. As we have pointed out in the past, our adjusted EBITDA is a unique metric for Sandwich, due to us having no I and very little T. Given that we have no debt and a substantial NOL position, fields are cash flows from federal income taxes. Commodity price realizations in the first quarter, before considering the impact of hedges, increased to 92.35 per barrel and 384 per MCF, which represent 97% and 82% of daily average index spot prices of WTI for oil and Henry Head for natural gas, and MGL Realizations were $33.73 per barrel or 35% relative to WTI. Please note that current natural gas prices in the second quarter of 2022, having recently reached spot prices above $7 per MCF beginning in April, subsequent to the quarter we are reporting on. As of today, we have no open hedge positions or commodity derivative contracts. However, as we invest shareholder capital into our drilling completion and well reactivation programs, will work side-by-side with our board to evaluate and potentially insert into hedge positions to help protect investor capital spent. As alluded to earlier, we have maintained our large NOL position, which is estimated to be $1.6 billion as of the end of 1Q22. Our NOL position has and will continue to allow us to shield our cash flows from federal income taxes. Our cost disciplines continue to improve during the quarter. with adjusted DNA decreasing to $2.2 million or $1.35 per VOE from $2.5 million or $1.46 per VOE in the prior quarter. We have also helped L&V and expense workovers to approximately $10.9 million or $6.76 per VOE during the quarter, partially driven by an increase in workover activity associated with well reactivations and well repairs at higher commodity prices. We still believe we can pair favorably with our peers in regard to G&A and LOE on both an absolute and a per-BOE basis. We continue to generate net income for our shareholders. During the quarter, we earn net income of approximately $35 million, or $0.95 per share. We should note that our earnings released yesterday and the 10-Q that we plan to file later today provide further detail on our financial and operational performance during the quarter.