History of SandRidge Energy, Inc.
As of December 31, 2010, the Company had a total of 5,323 gross (4,541.3 net) producing wells, all of which it operates, and had approximately 1,982,000 gross total acres under lease. As of December 31, 2010, it had 16 rigs drilling in the Permian Basin, seven rigs drilling in the Mississippian formation and one rig drilling in the WTO. It also operates businesses, which are complementary to its primary development and production activities. It owns related gas gathering and treating facilities, a gas marketing business and an oil field services business, including its wholly owned drilling rig business, Lariat Services, Inc. (Lariat). As of December 31, 2010, its drilling rig fleet consisted of 31 rigs, all of which were operational. It also captures and transports carbon dioxide to the Permian Basin for use in tertiary recovery projects.
Exploration and ProductionThe Company explores for, develop and produce oil and natural gas reserves in the Permian Basin, Mid-Continent and WTO. It also operates leasehold positions in the Cotton Valley Trend in East Texas, Gulf Coast and Gulf of Mexico. As of December 31, 2010, it had 62 gross (58.9 net) wells drilling or awaiting completion. It has holdings in the central basin platform (CBP), a part of the Permian Basin in West Texas. Reserves and associated production in this area are oil. As of December 31, 2010, the San Andres and Clear Fork zones had produced more than four and 1.8 billion barrels of oil, with well depths typically ranging from 4,500 to 8,000 feet. As of December 31, 2010, its interests in the Permian Basin included 3,285 gross producing wells with an average working interest of 94%. As of December 31, 2010, it was operating 16 rigs in the Permian Basin and drilled 484 wells.
The Company owns interests in properties in Oklahoma, Arkansas and Southern Kansas, which makes up its Mid-Continent area. As of December 31, 2010, it held interests in 851,054 gross leasehold and option acres in these areas. During the year ended December 31, 2010, it was operating nine rigs in the Mid-Continent area and drilled or participated in the drilling of 49 wells in this area. The Mississippian formation within the Mid-Continent area is located on the Anadarko Shelf in Northern Oklahoma and Southern Kansas. The Mississippian formation within the Mid-Continent area is located on the Anadarko Shelf in Northern Oklahoma and Southern Kansas.
West Texas Overthrust is located in Pecos and Terrell counties in West Texas and is associated with the Marathon-Ouachita fold and thrust belt, which extends east-northeast across the United States into the Appalachian Mountain Region. As of December 31, 2010, it had acquired, processed and interpreted 1,300 square miles of three dimensional seismic data in the WTO. The Pinon Field lies along the edge of the WTO in Pecos County. The reservoirs are the Tesnus sands (depths ranging from 3,500 to 5,000 feet), the Warwick Caballos chert (depths ranging from 5,000 to 8,000 feet) and the Dugout Creek Caballos chert (depths ranging from 7,000 to 10,000 feet). As of December 31, 2010, its interests in the Pinon Field included 892 gross (745.6 net) producing wells and a 96% average working interest in the producing area of the Pinon Field. As of December 31, 2010, it was operating one drilling rig in the Pinon Field. During 2010, it drilled 112 wells in this field.
The Company owns oil and natural gas interests in the natural gas bearing Cotton Valley Trend, which covers parts of East Texas and Northern Louisiana. As of December 31, 2010, it held interests in 32,650 gross (26,112 net) acres in East Texas. During 2010, it drilled 11 wells in the Cotton Valley Trend. As of December 31, 2010, it owned oil and natural gas interests in 54,426 gross (27,750 net) acres in the Gulf Coast area, which encompasses coastal plain from the southernmost tip of Texas through the southern portion of Louisiana. As of December 31, 2010, it owned oil and natural gas interests in 71,990 gross (39,427 net) acres in state and federal waters off the coasts of Texas and Louisiana. Its operations in the Gulf of Mexico extend from the coast to more than 100 miles offshore and occur in waters ranging from 30 feet to 1,100 feet. It operates one carbon dioxide flood and two waterfloods. All three floods are located in the Permian Basin area of West Texas.
Drilling and Oil Field ServicesThe Company drills for its account in West Texas and Northwest Oklahoma through its drilling and oil field services subsidiary, Lariat. In addition, it also drills wells for other oil and natural gas companies, in the West Texas region. Its rig fleet is designed to drill in its specific areas of operation and has an average of over 800 horsepower and an average depth capacity of greater than 10,500 feet. As of December 31, 2010, its drilling rig fleet consisted of 31 rigs with 20 of these rigs working on properties, which it operated. As of December 31, 2010, it owned 31 drilling rigs through Lariat. Its oil field services business conducts operations, which together with its drilling services complement its exploration and production business. Oil field services include providing pulling units, trucking, rental tools, location and road construction and roustabout services to it, as well as to third parties. During 2010, it performed approximately 89% of its drilling and oil field services in support of its exploration and production segment and approximately 11% for other operators.
Midstream Gas ServicesThe Company provides gathering, compression and treating services of natural gas in West Texas. Its midstream operations and assets serve its exploration and production segment, but also service other oil and natural gas companies.
In Pecos County, the Company owns and operates the Pike’s Peak gas treating plant, which has the capacity to treat 90 million cubic feet per day of natural gas for the removal of carbon dioxide from natural gas produced in the Pinon Field. It also owns the Grey Ranch carbon dioxide treatment plant located in Pecos County. Its two West Texas gas treating plants remove carbon dioxide from natural gas production and deliver residue gas into the Atmos Lone Star and Enterprise Energy Services pipelines. These assets are operated on fixed fees based upon throughput of natural gas. In addition, it has access for up to 60 million cubic feet per day of treating capacity at Hoover Energy Partners’ Mitchell Plant. It also owns or operates over 1,100 miles of natural gas gathering pipelines and dehydration units. Within the Pinon Field, it operates separate gathering systems for sweet natural gas and produced natural gas containing Carbon dioxide. It also services other oil and natural gas companies. As of December 31, 2010, it owned or operated approximately 86,000 horsepower of gas compression in West Texas.
As of December 31, 2010, the Company owned approximately 82 miles of pipeline gathering systems and operated more than 13,000 horsepower of natural gas compression in East Texas. It also owned approximately 83 miles of pipeline gathering systems and operated over 4,000 horsepower of gas compression in the Gulf Coast area, and owned approximately 47 miles of pipeline in the Mid-Continent area. Through Integra Energy, L.L.C., its wholly owned subsidiary, it buys and sells natural gas from wells it operates and wells operated by third parties within its West Texas operations. It buys and sells natural gas on back-to-back contracts using baseload and spot sales agreements.
Other OperationsAs of December 31, 2010, SandRidge CO2, LLC (SandRidge CO2) owned 245 miles of carbon dioxide pipelines in West Texas with approximately 63,000 horsepower of owned and leased carbon dioxide compression available. The captured carbon dioxide is used for tertiary oil recovery operations. As of December 31, 2010, SandRidge CO2 captured approximately 134 million cubic feet per day of carbon dioxide.
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