Production at SandRidge Energy Inc. stayed flat last year as the company continued to switch its operational focus to the Midcontinent, where it hopes to make gains this year and keep reducing costs.

In January, the company said its was selling its briefly-held Gulf of Mexico business for $1.2 billion in cash and liabilities to Riverstone Holdings LLC (see Shale Daily, Jan. 7), with plans to pump the proceeds back into its assets in Oklahoma and Kansas.

In its annual report filed with the U.S. Securities and Exchange Commission on Friday, the company said it continues to face litigation related to transactions set up before founder Tom Ward was ousted last year following unrest with shareholders (see Shale DailyMarch 22, 2013July 8, 2013).

SandRidge still appears to be in recovery mode after those revolts and changes to its management. Executives hope to correct the less-than-stellar financial and operational results of recent quarters with a renewed focus on horizontal drilling in the Midcontinent, limited operations in the Permian Basin and legacy assets in West Texas.

"One area of particular interest is the eastern portion of the broader play in Sumner County, KS," said COO David Lawler during an earnings call. "To date we have drilled five appraisal wells in this area. The wells delivered an average 30-day initial production of 601 Boe/d. This rate is 90% above the 2013 type curve and establishes the significant potential of the county."

Earlier this year, the company said it expected to exit 2014 with 29 rigs operating in its Midcontinent acreage, where it is working to discover and develop new opportunities. SandRidge's appraisal program there last year expanded its focus to Sumner County. That area consists of 117,000 net acres and the company plans to drill 45 wells there this year.

While the Midcontinent was SandRidge's top performer in 2013, producing 51.7 million boe/d, it hopes the region can recoup some of the production lost with the sale of its Gulf of Mexico business. Although it achieved the high-end of its guidance for the year, overall production in 2013 was largely flat at 33.8 million boe, compared to 33.5 million boe in 2012.

Pro forma production for the assets sales in 2013, though, was 22.5 million boe, or a 35% increase from pro forma production in 2012, said CEO James Bennett.

While the company expects its Midcontinent output to increase by 26% this year, it expects overall production to be 29.3 million boe. But it will do so with a reduction in capital expenditures linked primarily to redesigned wells and synchronized pad drilling in the Midcontinent.

The company brought 80 wells online with these techniques during the fourth quarter at an average cost of $2.9 million each. Operating expense was $6.91/boe and an "all-time low for the company," Lawler said.

Full-year adjusted net income at Sandridge was $103.9 million (18 cents/share), down from adjusted net income of $124.3 million (23 cents/share) in 2012.