SandRidge Energy has agreed to sell its assets in the Gulf of Mexico to Fieldwood Energy for US$750m – less than two years after it paid Dynamic Offshore Resources US$1.2bn for them – in a move than ends its controversial attempt to move into the offshore sector.
Fierce criticism from hedge fund shareholders TPG-Axon and Mount Kellett Capital Management – which claimed the investment has been “massively dilutive and strategically incoherent” – led Sandridge to sack chief executive Tom Ward in June 2013.
While current Sandridge chief executive James Bennett said the sale would give the company funds to invest in the further development of its onshore shale interests in northern Oklahoma and western Kansas, where it is the biggest operator in the Mississippian oil and gas formation, the deal is nevertheless likely to leave a bad taste in the mouth of some investors. For the private equity-owned Fieldwood is run by the former Dynamic management team.
The Sandridge share price dropped 1.9% on the news, as investors seemed to take fright at the potential negative consequences for the company’s cash flow and gearing.