SandRidge executives discuss possible future Mississippian joint venture
SandRidge Energy Inc. CEO Tom Ward on Friday discussed the possibility of a joint venture in the Mississippi Lime in 2014 or 2015.
During a conference call with analysts, Ward said the Oklahoma City energy company is fully funded through 2014, but that the executives already are working to secure financing to support its drilling budget for 2015 and beyond.
The booming Mississippi Lime oil and natural gas field covers much of northern Oklahoma and western Kansas.
Without naming names, Ward said he expected SandRidge to claim a higher price for its joint venture than other parties in the play.
Ward’s former company, Chesapeake Energy Corp., was widely criticized on Wall Street this week when it announced a $1.02 billion Mississippi Lime joint venture that translates into $2,400 an acre, far less than the $7,000 to $8,000 an acre Chesapeake previously said it expected to receive.
Ward did not address Chesapeake specifically, but he said SandRidge is positioned to command one of the highest rates in the Mississippi Lime.
Ward pointed out that SandRidge has spent more than $450 million on pipeline, electrical and saltwater disposal infrastructure in the area over the past two years.
It requires you to have infrastructure, so if other parties don’t have the infrastructure that we have, obviously, that’s worth something,” he said.
Drilling costs also are a factor, Ward said.
We average about $1.1 million per well less than the average of our peers,” Ward said. “We will save over $300 million this year net to SandRidge just from the average of our peers in drilling wells.”
Ultimately, land — and even the oil and natural gas beneath it — is only one small part of the price operators can command for their producing acreage, Ward said.
When you’re selling acreage, you’re really not selling acreage, you’re selling an enterprise,” he said. “You’re selling the ability for a joint venture partner to come and work with us for decades.”
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