Detailed narrative
Q2 Financial and Operational Highlights
SandRidge reported strong Q2 FY26 results with revenue of $51 million, up 48% YoY, and adjusted EBITDA of $34 million, up 49% YoY. Production increased 11% YoY to 19.7 BOE per day, driven by the operating development program and higher commodity prices, with oil production specifically up 22%. The company maintains a strong balance sheet with $115 million in cash and no debt, and generated $42.4 million in cash flow from operations.
Cherokee Play Development
The company successfully brought two wells online in Q2 from its one-rig Cherokee drilling program and two additional wells in July. The operations team continues to improve efficiency, with the fourth well drilled being the fastest and lowest cost to date. The 2026 capital program targets drilling 10 and completing 9 Cherokee wells, with estimated gross well costs between $9 million and $11 million, focusing on consolidating its position and extending development.
Strategic Bolt-on Acquisition
SandRidge signed an agreement on June 29th to acquire producing assets and leasehold interests in the Cherokee Play, adding 7,000 net acres and interest in 21 wells, including four SandRidge-operated wells. The acquired operated wells have an average 30-day IP of over 2,100 BOE per day, 58% oil. This acquisition is expected to close in Q3 and will bolster the company's inventory and expand its mid-continent footprint, with no plans to add personnel.
New Target Reservoir Discovery
A step-out well in the Cherokee formation tested a sub-member, yielding an initial 30-day average rate of over 10,000 MCF per day and over 100 barrels of oil per day. The 90-day average rate is approximately 11,000 MCFE per day, with cumulative production over 1 billion cubic feet after 100 days, showing exceptionally flat production. The company is assessing the long-term potential and stack pay opportunities, planning to be deliberate and patient in its evaluation.
Capital Allocation and Shareholder Returns
The company continues to fund all 2026 capital expenditures and capital returns from operations. It paid $10.6 million in dividends in Q2, including a regular dividend of $0.13 per share and a special dividend of $0.20 per share. Since the beginning of 2023, SandRidge has paid $5.05 per share in dividends. The Board declared another $0.13 per share dividend payable on August 31st, 2026, reflecting its commitment to return of capital.
Cost Discipline and Efficiency
SandRidge maintains its commitment to cost discipline, with adjusted G&A for the quarter at $2.7 million, or $1.52 per BOE, noted as peer-leading. Lease operating expenses were $10.3 million, or $5.73 per BOE, in line with expectations. The company is securing critical well components and equipment for the remainder of the year to minimize supply and inflationary pressures, particularly regarding diesel fuel surcharges.