A vote in Colorado this week may have provided a boost to Oklahoma City-based SandRidge Energy Inc.
SandRidge stock is up 15 percent since Colorado voters on Tuesday night rejected Proposition 112, a ballot initiative that could have limited oil and natural gas drilling in the state, including the North Park Basin, a key planned growth area for SandRidge.
“We are pleased that a large majority of Colorado voters rejected a ballot initiative this week that would have severely restricted energy development in the state,” SandRidge interim CEO Bill Griffin said Thursday morning during a conference call with analysts.
Griffin said executives made plans with the expectation that the ballot initiative would fail.
“The valuations and the way we’ve approached this has been consistently that Proposition 112 would be defeated,” he said during the company’s third-quarter conference call Thursday morning. “We certainly had contingency plans to the alternative. No, that development plan has remained unchanged.”
While SandRidge executives were hoping and planning for the initiative to be rejected, Wall Street traders may have been less certain. Any uncertainty can cause heartburn on Wall Street.
SandRidge shares climbed 60 cents, or 6.5 percent, Wednesday before adding another 84 cents, or 8.5 percent, Thursday after executives said the company generated a profit of $11.7 million in the third quarter.
The Colorado vote followed less than two months after SandRidge executives closed out a monthslong strategic review process by rejecting all offers to buy all or part of the company. The executives said the offers all undervalued the company and its assets.
Analysts on Thursday asked SandRidge executives whether the bids were low because of uncertainty about the Colorado initiative and whether a successful ballot initiative could have prevented pipelines from being built in the area.
“I can say that the uncertainty surrounding that proposition certainly had an impact,” Griffin said. “I think the continuing concern about a solution on the takeaway situation certainly had an impact, but the bottom line is the indications of interest that we received were just completely disconnected from the value, even on a PDP (proved developed producing) basis.”
The uncertainty also could have limited the number of offers SandRidge received.
“I’m not going to talk in any detail about specific offers, but I can only say that it was a factor in the interest or even some conversations with some interested parties that may not have made offers,” Griffin said. “It was a difficult point in time to be making significant capital investment decisions and commitments with that uncertainty.”
With the uncertainty removed, SandRidge executives said they are moving forward with plans to develop the Colorado acreage. Griffin also said the vote could lead companies to increase their bids.
“We are constantly looking at all the options, so yes, the option to revisit (the strategic review process) is certainly there,” Griffin said.
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