Thank you for standing by, and welcome to the SandRidge Energy Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I'd now like to turn the call over to Scott Prestridge, SVP of Finance and Strategy. You may begin.

Thank you and welcome everyone. With me today are Grayson Pranin, our CEO; Jonathan Frates, our CFO; Brandon Brown, our CAO; as well as Dean Parrish, our COO. We would like to remind you that today's call contains forward-looking statements and assumptions, which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. These statements are not guarantees of future performance and our actual results may differ materially due to known and unknown risks and uncertainties as discussed in greater detail in our earnings release and our SEC filings. We may also refer to adjusted EBITDA and adjusted G&A and other non-GAAP financial measures. Reconciliations of these measures can be found on our website. With that, I'll turn the call over to Grayson.

Thank you, and good afternoon. I'm pleased to report on a positive quarter for the company. At the end of August, we closed on our acquisition in the Western Anadarko Basin. From September, total production for the first month, reflecting the contribution of these assets averaged approximately 19 MBoe per day, made up of 52% liquids and the company's activity continues to translate to free cash flow from our producing assets. Before expanding on this, Jonathan will touch on a few highlights for the quarter.

Thank you, Grayson. Despite the downdraft in natural gas prices during the period, the company generated adjusted EBITDA of nearly $18 million in the third quarter. As we have pointed out in the past, our adjusted EBITDA is a unique metric for SandRidge due to us having no eye and very little teeth given that we have no debt and a substantial NOL position that shields our cash flows from federal income taxes. On the eye portion, we generated approximately $1.6 million of interest income during the quarter from cash held and various high-yield deposit accounts, which nearly offset our adjusted G&A for the quarter. The company initiated a return of capital program last year with total cumulative dividends paid to-date of approximately $150 million or more than $4 per share. On November 5, 2024, the Board of Directors declared an $0.11 per share cash dividend payable on November 29, 2024, to shareholders of record on November 15, 2024. Following our recent acquisition, cash, including restricted cash at the end of the third quarter was more than $94 million, which represents more than $2.50 per share of our common stock issued and outstanding. The company has no term debt or revolving debt obligations and continues to live within cash flow, funding all capital expenditures and capital returns with cash flow from operations and cash held on the balance sheet. Commodity price realizations for the quarter, before considering the impact of hedges, were $73.7 per barrel of oil, $0.92 per Mcf of gas and $16.25 per barrel of NGLs. As mentioned earlier, we have maintained our large federal NOL position, which was roughly $1.6 billion at quarter end. Our NOL position has and will continue to allow us to shield our cash flows from federal income taxes. Our commitment to cost discipline continues to yield results with adjusted G&A for the quarter of approximately $1.6 million or $1.02 per Boe. We continue to generate net income for our shareholders. And during the quarter, we earned approximately $26 million or $0.69 per basic share. Net cash provided by operating activities was approximately $21 million during the period. Over the first nine months of the year, the company generated approximately $34 million in free cash flow, which represents a conversion rate of approximately 76% relative to adjusted EBITDA. Before shifting to our outlook, we should note that our earnings release and 10-Q will provide further details on our financial and operational performance during the quarter.

Thank you, Jonathan. Thought it would be useful to give a brief update on our recent acquisition before touching on other company highlights. As a quick recap, our recent acquisition in the Western Anadarko Basin focused in a Cherokee play included 44 producing wells and four drilled but uncompleted wells concentrated in Ellis and Roger Mills Counties of Oklahoma as well as interest in 11 drilling and spacing units. From an activity standpoint, two of the four DUCs have now been completed with the most recent achieving a 30-day IP over 1,000 Boe per day, 70% oil. We recently finished completions on the last two DUCs with anticipated first production later this month. As Jonathan mentioned earlier, the contribution of these new assets helped the company achieve a new peak average daily rate this year at nearly 19 MBoe per day, while also increasing our percentage of oil and liquids. This represents a 27% increase to the second quarter average daily production rate on a Boe basis and a 65% increase on an oil basis. Please keep in mind that September was the first full month of contributions from the newly acquired assets to our financials and Q4 will be the first full quarter. Revenue for the acquired assets in July and August were recorded as downward adjustments to the purchase price with details provided in our 10-Q. This acquisition provides key benefits for the company to include bolstering our base production and cash flow levels while preserving our strong balance sheet and planned capital return program, diversifying the commodity mix of our producing asset base and providing commodity optionality with future investments, upgrading our inventory through the Cherokee shale play, adding 22 2-mile laterals focused in a highly productive areas of the play with breakevens roughly at $35 WTI,…

Thank you, Grayson. Let's start on our capital program. The ducts that were previously discussed were an anticipated expansion of activity associated with our recent acquisition. From a timing standpoint, two of the DUCs were completed during the third quarter and the operated well had a 30-day IP over 1,000 Boe per day with 70% oil. The last two DUCs were completed during the fourth quarter and are planned to come online later this month. We did see some meaningful cost efficiencies with the most recent completions and are hopeful to leverage these savings going forward. In addition to the DUCs, we have focused on optimizing production from our incumbent asset base this year through high return and value-adding projects that provide benefits such as lowering forward-looking costs, enhancing production on existing wells and further moderating our base decline profile. The artificial lift systems we have and we'll be installing in our conversion program are tailored for the well's current fluid production and will reduce the electrical demand from the current artificial lift system, which is key to decreasing future utility costs. The focused efforts over past quarters in optimizing our wells production profile and costs that contributed to flattening the expected base asset level decline of our already producing assets. In addition to artificial lift conversions, our production optimization campaign has included heel completions, recompletions and refracs. The heel completion that we piloted last quarter was successful adding 4 times of production from pre-heel completion time. We have added three additional heel completion projects that will be executed this quarter. Our incumbent leasehold remains approximately 99% held by production, which cost effectively maintains our development option over a reasonable center. These non-Cherokee assets have a higher relative gas content and commodity price futures are not yet at preferred levels…

Thank you, Dean. Let us pause for a moment to revisit the key highlights of SandRidge. Our asset base is focused in the Mid-Continent region with a primarily PDP well set, which do not require any routine flaring of produced gas. These well-understood assets are most fully held by production with a long history, shallowing and diversified production profile and double-digit reserve life. Our incumbent assets include more than 1,000 miles each of owned and operated SWD and electric infrastructure over our footprint. This substantial owned and integrated infrastructure helps derisk individual well profitability for a majority of our legacy producing wells down to $40 WTI and $2 Henry Hub. Our assets continue to yield free cash flow with total cash after our recent acquisition as of quarter end of more than $94 million. This cash generation potential provides several paths to increase shareholder value realization and is benefited by a low G&A burden. SandRidge's value proposition is materially derisked from a financial perspective by our strengthened balance sheet, robust net cash position, no debt, financial flexibility and approximately $1.6 billion in federal NOL. Further, the company is not subject to MVCs or other significant off-balance sheet financial commitment. Bolstered inventory that provides further organic growth optionality and further oil diversification with breakevens roughly down to $35 WTI in high-graded areas. Financial flexibility that allows us to make adjustments to our business to take advantage of commodity cycles. This flexibility extends to our net cash position, which among other advantages and strategic uses to include the return of capital, provide the buffer, if not a benefit to any commodity headwinds and the optionality to further grow our business. Finally, it's worth highlighting that we take our ESG commitment seriously and have implemented disciplined processes around them. We remain committed to…

Thank you, Grayson. We were able to keep adjusted G&A to $1.6 million for the quarter or $1.02 per BOE, which is leading among our peers. As noted, the interest earned from our existing cash deposits after the acquisition nearly offset adjusted G&A for the quarter. The efficiency of our organization stems from our core values to remain cost disciplined as well as prior initiatives, which have tailored our organization to be fit for purpose. We plan to maintain our low-cost and efficiency-focused mindset moving forward to include the recent acquisition, which will further benefit our per BOE cost metrics. We will continue to balance the weighting of field versus corporate personnel to reflect where we actually create value and have outsourced necessary but more perfunctory and less core functions, such as operations accounting, land administration, IT, tax and HR. Given our efficient structure and ability to flex with both activity and commodity prices, our total personnel has remained consistent at just over 100 people, while retaining key technical skill sets that have both the experience and institutional knowledge of our area of operations. In summary, the company had a 76% EBITDA to free cash flow conversion rate over the first nine months of 2024, more than $94 million in cash and cash equivalents at quarter end, which represents more than $2.50 per share of common stock issued and outstanding and expanded inventory of high rate of return, low breakeven projects. A Mid-Con position that is approximately 99% held by production, which preserves the option value of future development potential in a cost-effective manner. Low overhead, top-tier adjusted G&A of approximately $1.02 per BOE for the quarter. No debt, in fact, negative leverage, positive free cash flow and a growing net cash position supported by a flattening production profile and double-digit reserve life asset base and $1.6 billion of federal NOLs, it will shield future free cash flow from federal income tax. This concludes our prepared remarks. Thank you for your time. We will now open the call to questions.

[Operator Instructions] Your first question comes from the line of Kyle May from Sidoti & Company. Your line is open.

Hey, good afternoon everyone. I was wondering if we could start with the latest acquisition and if you could maybe expand on your drilling activity plans for the Cherokee play asset?

Sure, Kyle. I appreciate you calling in and great question. Our recent plans have been to complete the ducts Dean talked about on the call. And we're putting together a plan to initiate drilling on our joint spacing units that will extend into next year. So we have 11 DSUs, 22 extended reach or two-mile laterals that we'll be developing over the next couple of years.

Okay. Great. Any sense of how many you might drill next year?

I think our plan right now is to developed with one rig or a partial rig year, and you can drill one well every 30 days. So you get a massive of 12 wells in a year. So that would be our threshold for where we're at right now.

Okay. Great. And one follow-up for me. Can you provide any details about the well cost and expected returns in the Cherokee play compared to your legacy asset?

Sure. No, we're glad to expand on that. I think, as I've mentioned a couple of times on the call, the Cherokee assets has higher oil content relative to our legacy assets, which are more gassy in nature. And therefore, the economics today but more attractive just given the ratio between WTI and Henry Hub. Again, as that changes in the future, this acquisition gives us more tools in the kit bag for capital allocation purposes where WTI is constructive, we can lean more into the Cherokee assets. And as gas is projected in Contango to be higher in the future, we can exercise our development options on those legacy assets and in a favorable environment for both commodities, but we can lean into both. I think the returns in the area are robust enough, that we feel it makes sense to continue to allocate capital there going into next year. And I mentioned that the breakeven is up here are roughly $35 per barrel and WTI to give you a relative sense on where the floor is at.

Okay. Great, I appreciate the time today.

Yeah. Thank you, Kyle.

[Operator Instructions] And we have no further questions. This does conclude today's conference call. We thank you for your participation. And you may now disconnect.