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Diversified Opportunities Report

SandRidge Energy, Inc.

Apr 06, 2023

SD:NYSE
Investment Type
Small-Cap
Risk Level
Action
Rec. Price ($)

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

SandRidge Energy, Inc. is an independent oil and gas firm focusing on acquisition, development, and production. The company's principal operating regions are in Oklahoma and Kansas on the Mid-Continent. The Company owns or has a stake in about 1,442 gross producing wells, 947 of which it operates, and over 551,000 gross total acres under lease, predominantly in Oklahoma and Kansas.

Kalkine’s Diversified Opportunities Report covers the Investment summary, Key Financial Metrics, Shareholding Pattern, Business Updates, Operational Metrics, Risks, Financial Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, and Investment summary

  

1.3 Key Metrics:

Having a bigger profit margin than the industry standard, SD is more adept at cost management, negotiating favorable terms with suppliers, and achieving higher levels of operational efficiency. A higher current ratio compared to rivals also suggests that the company is managing its working capital and short-term liquidity well.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~37.48% of the total shareholding, signifying diverse shareholding. Icahn Associates Corporation and The Vanguard Group, Inc. are the biggest shareholders, holding the maximum stake in the company at ~13.07% and ~4.48%, respectively.

1.5 Natural gas and Oil prices analysis:

On Thursday, WTI oil futures decreased slightly to about USD 80 per barrel as fresh evidence suggested a looming recession that might reduce energy consumption. The US's services sector growth slowed to a 3-month low, private firms added fewer jobs than anticipated, and industrial orders declined for the second consecutive month, according to data, raising the possibility that the economy may be cooling. Since OPEC+ unexpectedly declared on Sunday that it will cut output by 1.16 million barrels per day from May until the end of 2023, the US oil benchmark has gained almost 6% this week. However, the most recent EIA data revealed larger-than-anticipated decreases in US petroleum and oil stocks. More than the market anticipated, the US crude oil stockpiles dropped by 3.739 million barrels last week. Distillate stockpiles decreased by 3.632 million barrels while petrol stockpiles fell by 4.119 million barrels. For the third consecutive month, Saudi Arabia has increased the cost of its premium oil for Asian consumers.

Due to continuously low demand brought on by above-normal temperatures and large supplies, US natural gas futures were trading at roughly USD 2.1/MMBtu, the lowest price since September 2020. According to the EIA, working stock levels in underground storage reached 1.853 trillion cubic feet on March 24. This is 321 billion cubic feet more than the five-year average of 1.532 tcf and 442 billion cubic feet higher than this time last year. Since Freeport LNG's export plant in Texas started operating again, natural gas flows to LNG export facilities have been on pace to reach record highs. Nevertheless, Freeport LNG unanticipatedly cancelled several shipments because of problems with one of the plant's three liquefaction trains, raising concerns that it would take longer than anticipated for the business to resume normal operations.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of FY22:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Price Performance:

  • Due to the current rebound in the prices of underlying commodities, SD's share price has only decreased by 08% over the last three months. The oil stock had good momentum in the previous two weeks. However, over the longer term, the stock has fallen by 21.08% over the last six months.
  • The stock is leaning towards the lower band of its 52-week range of USD 28 and 52-week low price of USD 12.62, with the current price near a decent support zone of USD 13.00-USD 15.00.
  • The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of around 60.68.

4.2 Fundamental Valuation

Valuation Methodology: Price/ Earnings Multiple-Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance. 

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 05, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.


 


Disclaimer-

Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.

Kalkine Media LLC, an affiliate of Kalkine Equities LLC, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.