SandRidge Energy Inc.’s board on Thursday forced out both the company’s CEO and CFO, and announced capital expenditures (capex) for 2018 would be cut by about up to 27% as it reviews an unsolicited proposal to merge with Midstates Petroleum Inc.
In announcing the departure of CEO James Bennett and CFO Julian Bott, the Oklahoma City-based company’s board said "in light of our new strategic direction, discussions with large shareholders and robust deliberation among the independent members of the board, now is the right time to begin transitioning to a new leadership team."
Bill Griffin, who serves as an independent director, will serve as interim CEO while possible replacement candidates are considered. Chief Accounting Officer Mike Johnson will serve as interim CFO. SandRidge also appointed Sylvia Barnes as an independent board member.
Activist hedge fund billionaire Carl Icahn, who became SandRidge's largest shareholder last year, had clashed with Bennett and Bott.
The shakeup comes two days after Tulsa-based Midstates proposed a merger valued at about $1 billion. The proposed tie-up could create the largest exploration and production (E&P) company focused on the Mississippian Lime play.
On Wednesday before Bennett's and Bott's ouster, SandRidge disclosed that its independent directors "are engaged in an ongoing dialogue with shareholders and are developing a plan of action in line with their commitment to acting in the best interests of all shareholders.
"The SandRidge board, in consultation with its independent financial and legal advisors, will carefully review and evaluate Midstates' proposal, taking into account the company's current strategic plan and standalone prospects."
The board has approved a $180-190 million capex budget for 2018, a 23-27% reduction from 2017.
Plans include running a one-rig development program in the northwest part of Oklahoma's STACK (aka the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) play. It also plans to continue to deploy one rig in Colorado's North Park Basin, part of the Niobrara formation.
If SandRidge and Midstates were to merge, the combined E&P would control 456,000 net acres in the core of the Mississippian Lime; combined production would be more than 53,000 boe/d. It would also own more than 75,000 net acres in the northwest STACK. The combined company as laid out by Midstates would be led by its CEO David Sambrooks.
SandRidge in late December canceled plans to purchase Bonanza Creek Energy Inc. after Icahn became SandRidge’s largest shareholder.