SandRidge: Ward Probe Could Damage Stock
In early June, SandRidge (SD) announced the sale of its subsidiary SandRidge Tertiary LLC to CO2 Investments, LLC in a deal that will see $130 million in cash added to SandRidge’s balance sheet. According to SandRidge, SandRidge Tertiary “is the sole gatherer of CO2 from the four natural gas treatment plants located in the West Texas Overthrust”. West Texas is a major center for tertiary oil recovery. Major CO2 recovery projects in this area include operations from Occidental Permian, a subsidiary of Occidental Petroleum (OXY), Chevron (CVX) and Exxon Mobil (XOM).
Oxy is the largest injector of CO2 for enhanced recovery in the United States, injecting over 550 bcf of CO2 in the Permian Basin in 2011 alone. Oxy operates a natural gas processing facility in West Texas to fulfill its needs in a joint venture with SandRidge. It is unclear how the sale of SandRidge Tertiary will impact the joint venture, though on its face I think it is likely Oxy is looking at higher costs for methane takeaway as it is not currently using most of the methane separated during processing at the plant.
SandRidge & Chesapeake, Ward & McClendon
Late last month, securities arbitration law firm Klayman & Toskes, P.A. announced it was investigating SandRidge on behalf of its clients for “investment losses due toâ€¦over-concentration”, though responsibility for over-concentration would not lie with SandRidge. A recently announced investigation by the Shareholders Foundation, Incorporated ups the ante. The Shareholders Foundation is indicating that it believes SandRidge violated securities law by materially misrepresenting SandRidge’s “business, prospects, and operations.” To continue reading, click here.