Oklahoma City-based SandRidge Energy Inc. is slashing costs, including in its executive ranks, and dramatically lowering capital expenditures (capex) to ensure it can operate as a going concern in what its new CEO called an “historically challenged” environment.

The company has reduced planned capex to $4-9 million from previous guidance of $25-30 million. In 2019, SandRidge invested $162 million.

"With the sharp downturn in commodity prices, we took swift measures to maximize the cash flow and liquidity of our business,” CEO Carl Giesler, who was appointed in April, said in announcing earnings Monday. “We implemented steep decreases in personnel and other savings measures, and we sharply curtailed planned capex for the year.

“We will only spend capital required for safety or mechanical integrity or for low spend, quick payback cash flow enhancing ‘small ball’ workovers and other projects,” he continued. “We believe our cost savings initiatives coupled with our restricted planned capex should enable us to generate positive operational free cash flow even in this historically challenged commodity price environment.”

SandRidge said 1Q2020 production totaled 2.6 million boe -- with 27% in oil, 30% in natural gas liquids and 43% in natural gas -- which was down from 3.2 boe a year earlier.

SandRidge, long plagued by financial concerns, for several years has contemplated a sale or merger.

Giesler, the former CEO of Jones Energy Inc., guided his last company, also an Oklahoma producer, through bankruptcy in 2019, which emerged from Chapter 11 protection last May. Jones then was sold to Oklahoma City-based Revolution Resources, a portfolio company of Mountain Capital Management LP, for about $201 million.

In announcing Giesler’s hiring, SandRidge noted his turnaround experience and said the company would continue to look to sell assets and, potentially, merge or sell the company.

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The Midcontinent producer said it struck a deal this month to sell its corporate headquarters for $35.5 million, which is slated to close by the end of September.

“We've negotiated the ability to retain a few floors that'll be more than sufficient for our needs through the end of this year, and that'll be rent free,” Giesler said during a call with analysts Tuesday. “At the end of this year, we'll need to find alternative office space that I think will be incredibly cheaper than the $2.5 million we're paying to upkeep the building.”

The headquarters sale followed a disclosure in April that COO John Suter and CFO Michael Johnson would leave the company after the close of the second quarter as part of ongoing staffing reductions. Giesler said overall, the corporate headcount declined from roughly 120 at the start of the year to 26 at the end of March.

Corporate cuts are to help lower adjusted general and administrative expenses to a new 2020 guidance of $11-15 million from 2019’s actual $29 million and guidance in February of $18-20 million. Field personnel reductions and other operational trims are expected to lower lease operating expenses to a new 2020 guided range of $48-54 million, versus last year’s $91 million and prior guidance of $72-78 million.

To further boost cash flow, SandRige took advantage of a recent increase in natural gas future prices by hedging expected proved developed producing gas through October, Giesler said.

“We remain confident in our liquidity situation and options to expand our access to capital,” Giesler said. “As evidence of this, note that we chose not to extend the tenure of our current credit facility past April 2021 -- simply wasn't worth increased pricing and other restrictions that would have been required in this historically tight oil and gas bank market. Rest assured, though, we'll continue to work with our bank group and monitor the market for appropriate ways to access capital.”

As of May 12, liquidity totaled $26 million, including $2 million of cash and $24 million available under its credit facility. The company has $48 million drawn on the facility. Debt totaled $46 million at the close of the first quarter, down from $57.5 million at the start of 2020.

Net losses in 1Q2020 were $12.7 million (minus 36 cents/share), compared with a year-ago net loss of $5.3 million (minus 15 cents).