Ladies and gentlemen, thank you for standing by. Welcome to the SandRidge Third Quarter 2014 Operations Update Conference Call. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct the Q&A session (Operator Instructions). Please note, this call is being recorded, today, Wednesday, November 6, 2014 at 9 o'clock Eastern Standard Time. I would now like to turn the meeting over to your host for today’s call Mr. Duane Grubert, EVP of Investor Relations and Strategy. Sir, you may begin.

Thank you, Operator. Welcome everyone and thank you for joining us on our Third Quarter 2014 Operations Update Conference Call. This is Duane Grubert, EVP of IR and Strategy and with me today are James Bennett, President and Chief Executive Officer and Eddie LeBlanc, EVP and Chief Financial Officer. We would like to remind you that in conjunction with our press release and conference call, we have posted slides on the Investor Relations part of our web site. Keep in mind that today's call contains forward-looking statements and assumptions which are subject to risk and uncertainties, and actual results may differ materially from those projected in these forward-looking statements. Please note that this call is intended to discuss SandRidge Energy and not our public royalty trust. Now let me turn the call over to CEO, James Bennett.

Thank you, Duane. The third quarter represented another solid operational quarter with strong growth, innovation progressing, improved liquidity and hedging and a quality project inventory even at these lower oil prices. First, we’re disappointed with not having financials to report. As announced in our 8-K and press release, our 10-Q filing is delayed. Eddie will give you additional details, but this is a result of a comment by the SEC that relates to our booking of our annual CO2 under-delivery penalty. While we don’t have a final resolution of this matter with the SEC, the issue under discussion relates to the timing and periods where we booked the under-delivery. And, let me stress that we don’t believe this impacts other areas of our business, other internal controls or accounting and is isolated to this one issue. You will notice that our earnings release does not contain financials and is an operational update. While we don’t have filed financial results for the quarter, I do believe that our results were in line or exceeding expectations. Turning to operations, a solid operational performance is one of the consistent themes you will see in our results this quarter. Production growth continues to be strong and on track with our expectations, driven by another group of good mid-continental wells and ongoing improvements in our base PDP performance. Mid-continental production grew to 67,000 barrels of oil equivalent per day, a 19% increase over last quarter and a 39% increase from Q3 last year. Total company production grew to 80,000 barrels of oil equivalent per day representing the 14% increase from last quarter and 26% growth rate from pro forma third quarter 2013. Notably and on a pro forma basis, total company liquids production was 3.8 million barrels, an increase of 37% from Q3 of last…

Thanks James. At this point of the call, I usually delve into the financial results with the quarter and the year-to-date discussing pro forma comparisons for quarter-over-quarter and year-over-year. Unfortunately, this time we’re not able to discuss financial results due to not yet having concurrence with the SEC regarding the recording of the CO2 under-delivery penalty associated with the Century Plant contract. In 2012, based on our review of accounting literature, we determined to book any annual under-delivery penalty in the fourth quarter of any year a penalty was there. This is an executory contract with annual volume requirements and delivery make up provisions. Any under-delivery penalty and associated invoicing is done annually. Therefore we believe we correctly applied GAAP, specifically ASC 450 by booking the liability on an annual basis at the end of the year once we know the actual penalty. We have received unqualified opinions in 2012 and 2013 from our external auditors using this approach. As explained in our 8-K filed November 4th our press release dated that same day and in our operational update released on November 5th the SEC as part of the routine review of our 2012 10-K has informed us they believe a different accrual period quarterly is more appropriate. We are still working toward resolution with the SEC and don’t have a final answer. We believe that likely the IP outcome will move us reclassifying previously recorded liabilities into earlier quarterly periods and accruing an estimated penalty for 2014 oil. We’re disappointed in this outcome but believe our team made a reasonable application of accounting principles. This is a complicated set of circumstances that we believe lend themselves to more than one reasonable accounting interpretation. And the SEC has a different interpretation of the applicable accounting period. Until we have concurrence…

(Operator Instructions) Your first question comes from the line of Neal Dingmann from SunTrust. Your line is open.

Hey guys good morning this is Will for Neal. Couple of questions looking at your MidCon basically overall activity around the Woodford, how do you all think about that going forward I know you talked about increasing that obviously their initial results are pretty positive but how should we think about that for next year?

Sure, Will this is our new geologic model that we came up with targeting thoroughly mature Woodford zones with frack barriers that does allow for more effective stimulations if you remember some of the initial Woodford wells we drill we believe we’re fracking out of the zone and stimulating non-productive and high water variant zones. So this is our second successful well we have two rigs running remainder of the year for the Woodford program but look for us when we come out with our 2015 guidance to give more detail around the Woodford program. But I would expect it be a part of our capital plan for next year.

Yes thanks James and then also looking over on the multilaterals. You guys are 21% multilaterals for the quarter. How should we see that percentage should we expect that to increase pretty sizably next year. How should we look at that?

We said on our last call that we would average about 20% for the back half of the year and we’ll come in right around that I would expect us to roll it out in a little more detail when we come out with our 2015 guidance. But in terms of percentages I think it will go up from this 20% that we have in the back half of the year.

Your next question comes from the line of Charles Meade from Johnson Rice. Your line is open.

Good morning James and to the rest of team there. I am not trying to sneak a question here but I was wondering is it possible to ask a question about how you and SandRidge decided how much of your midstream assets to put into MidCon?

I understand the question but I can’t comment on the MLP or the assets that we’re going to put into it. I’ll need to direct you to the registration stage.

Going back to the questions of multilateral I want to understand how you are coming. So when you say 21% are multilaterals are you counting each lateral is one or is that a CapEx percentage? What's the right way to think about that?

Good question because you could think about in terms of CapEx or wells. But we do it on per laterals so for the lateral spud in the quarter, 134 was spud, 28 of those laterals were multilaterals 21% and in terms of the one that were completed and on flow back for the quarter as 13 laterals out of a 122 laterals or 11%.

Got it and if I could actually just go back to the earlier question to talk about you went through the Woodford, the new geologic now you said naturally factored with a frack barrier were those the two key pieces?

I said thermally mature with natural frack barriers, yes.

Got it and I know that you’re pushing some of these questions off to when you come out with your guidance but do you have a sense of once you put those filters on your position. How much acreage you have and how big that can be as part of your program?

Sure on our acreage position we’ve got about 650,000 acres in our focus area. Almost 55% of that is held by production and so we think on the acreage we will maintain around that 650,000 acres. But importantly that percentage PP is going to go up every quarter and every year.

Right but how much it would be perspective for that Woodford what should put those filters on?

Sorry I didn’t you were talking about Woodford. Yes Charles let us table that until we come out with 2015.

Your next question comes from the line of Shawn Needham from Oppenheimer. Your line is open.

James. kind of on the funding environment just kind of give me the current commodity price environment, how do you weigh achieving your production growth goals along with maintaining your three and half times leverage targets as well as yourself funding status maybe just kind of on the high level of how are you approaching at this point?

Sure. One of the reasons we mentioned on this call that we will be lowering our CapEx in 2015 is because of the declining commodity prices. I will stress though that we are not that sensitive in the year 2015 to changing commodity prices, $10 change in oil we take our consensus estimates the $10 change in oil from $90 down to $80 given our hedge position is about 50 million movement in EBITDA. So for 2015 we’re actually not that sensitive for the changing commodity prices but recognizing the strip has come down and it’s basically pretty flat at $80, we want to be cautious with our capital and protect our balance sheet and leverage and liquidity here a bit. So we’re going to balance that, we want a capital efficient program next year, we’ll still be able to provide some meaningful growth but we’ll keep our leverage and liquidity in check. And again the hedge position next year gives us natural downside protection.

When you’re thinking about your liquidity position, are you baking in some amount of incremental liquidity from your proposed MLP, are you assuming that doesn’t happen?

Great question. No, we’re assuming we’re not baking that into our calculation right now, if that happens we’ll make a decision at that point. But that’s not based in our liquidity model right now.

And then just lastly for me on your share buyback program, certainly appreciate your comments earlier but maybe just kind of given where we’re today. Could you comment on how you would approach or think about using some of your cash balances in buyback bonds? Since they’re all below par at this point.

Yes with our liquidity and cash we got to make decisions on how we allocate that, do we drill wells, do we return to shareholders, do we buyback securities. Obviously we’re still getting very good returns on our wells. But it’s really going to depend on what the market looks like at that time. What is our liquidity, where the bond is trading, where’s the equity trading, where’s the forward strip on commodity prices? So you’re talking about an event, it’s in the first quarter next year. So really can’t comment on it now, we’ll just have to see what the world looks like then.

Your next question comes from the line of Jamaal Dardar from Tudor, Pickering, Holt & Co. Your line is open.

Just a few quick questions. Looking at NGLs this quarter seems like they were up substantially. I was just wondering what led to that increase in NGL production and is that something we should see going forward?

When we rolled out our initial 2014 guidance, you’ll notice a strong growth large growth in NGLs from about 1.5 million barrels last year to almost 4 million this year, lot of its due to growth in our gas volumes but a lot of it is also due to a new percent-of-proceeds contracts that we signed about year and a half years ago. That contract all existing Mid-Continent wells flipped into that percent of proceeds contract in June of this year. So the third quarter was the first quarter where we saw the full contribution of all of our wells receiving the benefit of that percent-of-proceeds contract. So something we’ve been forecasting for a while but this is the first quarter where it really showed up in the quarterly numbers.

And just looking at ‘15, I know you’re waiting to give more color when guidance comes out. But do you have kind of a debt level that you’re going to feel comfortable with or that you want to stay at next year if commodity prices persist?

On the debt level we have 3.2 billion of bonds and nothing drawn on our revolver as Eddie mentioned we just increased our borrowing base to 900. So I won’t put an absolute debt number because it’s going to depend on a lot of things, the forward strip for commodity prices, our drilling program for next year but I think I was careful with our words on the prepared remarks, we’re defensively positioned for next year with a lot of hedges and no bond maturities and we’re going to balance our capital program with protecting our liquidity and leverage.

Your next question comes from the line of Adam Leight from RBC Capital. Your line is open.

You have a very good hedge position for your oil production in 2015 with the gas strip relatively flat there, I guess sort of underweight on your gas hedges. How are you thinking about that at this point?

Adam, we did earlier this year step in the market and hedge about 15 Bcf gas next year at 450. We focus on hedging oil little more than gas here, oil provides about 75% of our cash flows, even though it’s half of our production. So we get a lot more hedge value by hedging oil here. We keep an eye on gas like I said we stepped in the market earlier this year and we’ve got an eye on the strip and should it to a point, we can see us locking in more gas hedges but again we’ve been more focused on oil hedges because that’s where the lion share of our revenue comes from.

But just given the volatility of the markets in general, I was just curious if you felt like it would be relatively easy to add some additional protection here. And could you remind me you’re your restricted payments capacity is at this point?

Let me research that number. Eddie just handed me, about $3 billion.

Okay. And then just lastly one more on the capital program thoughts for next year I don’t know how you’re thinking about this given you have lots of liquidity. But if you’re thinking a bit more conservatively about how you spend versus what might be available in the capital markets versus your revolver next year closer towards cash flow neutral and you’re still working with your overall capacity?

Sure. I said in my prepared remarks that recognizing the contraction of oil prices will be lowering our CapEx from that previously indicated 1.55 billion level we came with a three year plan we said we’d spend roughly 1.55 billion a year over three year that was obviously at a different commodity price environment. I think the fourth strip was about $96 then. So I am not going to give you an exact number yet, Adam, we’ll come out with that after we get final approval for the plan but expected to be lower than that 1.55 billion.

Your next question comes from the line of Adam Duarte from Omega. Your line is open.

Good morning guys. On the $75 millions of higher CapEx for this year, can you give a little more detail around what that’s for and what exactly you expect to accomplish with the higher spending?

Sure. About 45 million of that was related to the Permian and Gulf of Mexico as you know with the increased activity in the Permian Basin we’ve seen some cost pressures and cost inflation there that and we had to spend a little bit on some infrastructure to support the final piece of the Permian Royalty Trust drilling That drilling is wrapping up and is going to be completed in the next couple of weeks. And the $10 million is a rollover from the Gulf of Mexico divestiture one last piece of CapEx coming in. So that was 45 million of it. The biggest piece Adam is on the land and seismic we’ve elected to participate in some more 3D seismic shoots and have one additional proprietary shoot, some of this is covering our Woodford acreage, some is covering Chester so we’ve seen continued success in those two zones we’ve elected to shoot a little more 3D. Also, in our Chester area and in our Garfield area we’ve seen continued opportunities to pick up some leases in the $200 to $400 an acre range. So we’ve guided to increase our land spend slightly in those areas. We think that’s going to set us up well for ’15 and ’16 the combination of that land and seismic.

Okay. And on the new leases is that sort of additional, is that core stuff or is that step out acreage, or?

It’s all within the focus area, but some of its perspective for Chester and some of it is in around very close proximity right in around our good wells in the Garfield area.

Your next question comes from the line of Gary Stromberg from Barclays. Your line is open.

I know you talked about keeping leverage and check in 2015. What do you think your comfort level is on debt to EBITDA next year? And can you just remind us what the leverage covenant is in your revolver?

Leverage covenant is 4.5 times I am not comfortable at 4.5 times. And when we come out with our 2015 capital plan we can give you a better feel for where we think the leverage will be. I think it will be in the kind of 3.75 range at end of this year give or take. But the way I think about leverage always and even next year I want to take into account on my hedge book for the coming 18 to 24 months what are my bond maturities which we don’t have any until 2020 and what is my base level of cash flow doing. So, I am not comfortable at 4.5 times, I am comfortable where we are now. But when we come out with our 2015 plan we will be able to give you a much better feel for where we’ll be in the calendar year 2015.

Okay, that’s helpful. Question on returns, I know you talked about 40% returns in the Miss $80 oil prices. How do we think about breakevens in the Miss play on the WTI basis?

Sure. We’ve got a page in our investor presentation where we show the returns at various prices. And coincidently on the far left we use $80 oil and 350 gas we put this together several months ago. So you can see where the lines cross there at the 2.9 million well cost, we’re right at that 40% return. But you would need another kind of $15 drop in oil to where you’re not generating an acceptable return in this play. And to be a little over breakeven we look at more of a 20% return than just breakeven.

Okay. And that’s all inclusive of all the infrastructure land that’s fully bakes full cycle?

No Gary that’s not. So if you take the 40% return and put in our infrastructure dollars on top of that, that takes about 10 percentage points or 1,000 basis points off the return. So the 40 loaded for infrastructure is about 30.

Okay got it and then last one from me it sounds like 2015 spending will be lower but I think you said you’re still looking at meaningful production growth. What do you think the minimums end level is to keep production flat from that fourth quarter level of around 84,000 barrels a day?

So on an annual basis not talking about any one quarter; we can spend in the neighborhood of $500 million just on D&C spending. So that wouldn’t include land or associated infrastructure or any capitalized items. But we can spend about 500 million on D&C spending and keep our production flat year-over-year.

(Operator Instructions) Your next question comes from the line of Eric Ruff from Morgan Stanley. Your line is open.

Just wanted to verify your operating cost for barrel oil equivalent, looking at your slide on your guidance it comes $37 to $38 per barrel range, is that full cycle cost?

Are you talking about just lifting cost?

Well I was trying to get what would be of a total operating cost basis including all taxes and lifting and operating cost?

Sure if I could you direct you to page 5 of the deck we put out this morning. It’s got our updated guidance range per barrel there. So taken roughly the midpoint of that you would have about $12 of lifting, but a $1.15 of production taxes about 350 G&A cash, another $0.50 of G&A stock so it puts you in the $17 a barrel in terms of cash cost excluding DNA.

And then when industry participants are talking about the average cost of production for the sale driller is roughly $50 to $60 per barrel are they including interest total cash interest expense on top of that?

Yes what they probably also including are the finding cost. So the costs to drill and find that some return on the capital maybe even some G&A burden. So I believe when people say $50 for breakeven they are including the cost to develop that not just the lifting cost. Once you’ve drill the well, the lifting cost to get the molecules out of the ground is actually pretty low. The big capital dollars are up front to drill the well.

Could you give an estimate of what that would be for you?

I believe it was Gary who asked a similar question on what’s the breakeven. I think for us to generate an acceptable return here are in the 60 plus range of oil price.

And also when we’ll be giving more specific CapEx guidance for next year?

That will be in the next couple of months after we’ve finalized our budgeting process towards the end of this year and receive board approval.

Your last question comes from the line of Robert Alpaugh from Simmons & Company International. Your line is open.

I was reading the recent 8K and I get the impression that $0.70 balloon payment for undelivered CO2 volumes could be on the table for accrual. Could you speak to this possibility or likelihood?

Yes we don’t believe that’s part of the discussion here that under-delivery penalty is paid in 2042. And to estimate that, it needs to be -- to book it needs to be estimable and probable which is neither at this point in time. We have until 2042 to make up those volumes. So that’s not part of the discussion to date so even focus on this annual $0.25 penalty.

There are no further questions at time Mr. Bennett I will turn the call back to you.

Thank you and thanks everyone for getting on the call. Just in wrapping up we had a strong quarter. We’re disappointed we don’t have financials but we’re working diligently to get those out. Production was up, our initiative program in Chester and Woodford are working. We had some great opportunities to purchase some additional land in and around those areas and chose to take that. The teams are doing an incredible job, executing the multilaterals and bringing our cost down and finally we have a very defensive position going into these commodity price headwinds with about 70% to 75% of our liquids or oil hedge next year and no warm maturities until 2020 and a program that can still generate 40% returns of these commodity prices. So we look forward to speaking again in the future. Thank you.

This concludes today’s conference call. You may now disconnect.