SandRidge Energy Inc. issued the following announcement on April 18.
SandRidge Energy, Inc. ("SandRidge" or the "Company") (NYSE: SD) today announced that Michael L. Bennett, who has served on the Board since October 2016, has been appointed Chairman, replacing John V. Genova who has elected to retire from the Board, effective immediately. The Company also announced the appointment of Kenneth H. Beer as a new independent director, filling the vacancy following Mr. Genova's retirement.
"Under John's leadership, the SandRidge Board has engaged extensively with shareholders, implemented a new operating plan to reduce costs and capital expenditures, refreshed our Board, and reshaped and refocused the management team. Importantly, we launched a strategic review to maximize shareholder value following our recent rejection of an inadequate merger proposal from another company," said Mr. Bennett.
Mr. Bennett added, "We thank John for his significant contributions to SandRidge and wish him well in his future endeavors. The SandRidge Board and management team are pleased to welcome Ken Beer to our Board. Ken brings extensive oil and gas industry knowledge, financial expertise and corporate management experience. We are confident that he will be a valuable addition to the Board as we move forward to address the challenges and explore the opportunities to realize greater value for all SandRidge shareholders."
SandRidge Recommends Election of its Highly-Qualified Board Nominees
SandRidge also announced that it will be filing its preliminary proxy statement for its 2018 Annual Meeting with the Securities and Exchange Commission shortly. At this year's Annual Meeting shareholders will be given the opportunity to elect directors and vote on three other proposals. The Board believes that the current SandRidge directors are highly qualified to serve the best interests of all SandRidge shareholders. The Company is confident that its nominees – Michael L. Bennett, Sylvia K. Barnes, William M. Griffin, David J. Kornder, and Kenneth H. Beer – possess the necessary qualifications, independence, and knowledge of SandRidge's business and industry risks and drivers to lead the company forward through this evolutionary period.
"Our current directors are committed to executing our strategic plan as we complete the strategic review and continue to act on behalf of all SandRidge shareholders," said Mr. Bennett. "As a Board, we have solicited and acted decisively on feedback from our shareholders to focus on our core assets, cut operating costs, right-size capital expenditures, and initiate a fair and thorough strategic review process to maximize shareholder value. In contrast, by nominating directors, Mr. Icahn has chosen to pursue an obvious attempt to circumvent the thorough and unbiased strategic process currently underway in favor of a narrowly defined, cash-only process potentially rigged for his benefit."
The Board continues to offer Mr. Icahn the full opportunity to participate in its strategic review process and is disappointed that he and his affiliates have determined to bypass the process and attempt to seize control of the Board of Directors without any assurance of a fair premium to all investors. The Board believes that selecting the full, non-independent slate of directors proposed by Mr. Icahn is not in the best interest of all shareholders and presents numerous potential conflicts. The SandRidge Board has made many attempts to constructively discuss possible changes to our Board's composition with Mr. Icahn, including offers to consider independent candidates if he wanted to propose them. While Mr. Icahn has refused to accept any of these offers, as part of our ongoing commitment to good governance, the SandRidge Board will evaluate Mr. Icahn's candidates individually and will consider qualified, independent persons that share the Board's focus on maximizing value and representing the best interests of all shareholders.
Board Supports Continuation of Limited Duration Rights Plan
In order to allow the Board to complete the strategic review process on a timely basis and not allow Icahn or any other party to acquire defacto control of the Company through open market or private purchases, the Board is asking shareholders to vote in favor of retaining the limited duration rights plan in place until November 26, 2018. The limited duration rights plan was adopted with two important features: one that required the directors to put the rights plan to a vote at this Annual Meeting as a condition to it remaining in place until November and a second which exempted any qualifying all-cash tender offers made for all shares of SandRidge's common stock. This feature protects all shareholders from coercive or inadequate offers and gives all shareholders the right to vote on it at this Annual Meeting. This added feature puts the decision on whether to keep the limited duration rights plan in place long enough for the strategic review to be completed fully in the hands of independent shareholders.
Board is Taking Action and Delivering Results
The SandRidge Board is conducting a formal and thorough process to evaluate strategic alternatives, which may include divestment or joint venture opportunities associated with our North Park Basin assets, potential corporate and asset combination options with other companies and/or a sale of the Company. SandRidge has committed to evaluate any credible offers to acquire the Company, including offers from Icahn Capital, and will pursue options that maximize shareholder value.
- Solid Operating Performance. In 2017, SandRidge met or exceeded its production and cost targets for the year. In addition, the Company's actions enabled it to increase:
- Proved reserves to 177.6 MMBoe, with a 130% reserve replacement ratio;
- Total present value of proved reserves to $749.3 million (discounted at 10% per annum and calculated in accordance with GAAP).
- Improved Financial Discipline. SandRidge has initiated action to reduce general and administrative cash expenses by one-third to $36-$39 million per year. Following the implementation of this plan, the Company will have reduced general and administrative expenses by 50% since emerging from bankruptcy in October 2016.
In addition, SandRidge has implemented a focused capital program with moderate outspend reducing its capital expenditure budget for 2018 to $180-$190 million from $247 million in 2017. - New Management and Directors. In early 2018, the Board implemented a management transition plan, including a new President and Chief Executive Officer and Chief Financial Officer.
The Board has also added two new directors – Sylvia Barnes and Ken Beer – who bring valuable experience in capital markets and the energy industry to the Company's Board. With the addition of Ms. Barnes and Mr. Beer, 40% of the Board is new since the beginning of 2018, bringing independent individuals with new ideas and perspectives and the same focus on value creation to the Board. - Aligning Pay with Performance. The Board has taken considerable actions to address concerns related to compensation raised over the past year. These efforts include eliminating the compensation program adopted by the prior Board in connection with the Company's reorganization in favor of a balanced program consisting of a more modest base salary and a greater percentage of performance-based annual incentives; and retaining a new independent compensation consultant.
The Company has also transitioned to granting restricted stock awards with double trigger vesting and, for 2018, committed that at least half of long-term incentive equity awards would be performance based and the Compensation Committee will consider further changes and suggestions by shareholders for improvements consistent with best practices in the industry.
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