The charge, which is due to low natural gas prices on March 31, 2009, is equal to the amount by which total capitalized costs of its proved natural gas and crude oil properties exceeded the limitation under full cost oil and gas accounting rules.
SandRidge Energy continues to pursue several previously announced strategic transactions that it believes, if completed, will enhance its balance sheet liquidity and future operations. These include the following:
— The sale of non-core deep drilling rights relating to its East Texas properties. SandRidge Energy expects to retain its rights to about 13,000 net leased acres in Louisiana that may be prospective for Haynesville Shale exploration.
— The negotiation for a participation arrangement for its Pinon field drilling program pursuant to which a third party would pay a portion of drilling costs to acquire a working interest in newly drilled wells. The expected investment would initially call for a $15 million commitment and, subject to a mutual option, up to an aggregate $75 million in drilling commitment from the third party.
— The sale of an interest in or the creation of a joint venture with SandRidge Energy’s midstream assets located in the Pinon field. Based on preliminary indications of interest, the company expects to consummate a transaction for its midstream assets in the Pinon field in the second or third quarter of 2009. This transaction is expected to include an initial investment of $200 to $300 million with potential for future capital investments for infrastructure expansions.
