SandRidge Energy SD
SandRidge trades at a ~45% discount to its own PV-10 because the post-bankruptcy 'bankruptcy board' destroys value via dilutive deals; replace it with Icahn's slate to run a real sale process.
Thesis
SandRidge Energy emerged from bankruptcy in October 2016, but its newly constituted 'bankruptcy board' has destroyed roughly 27% of shareholder value while crude oil rallied 50%. Icahn — SandRidge's largest individual holder at 13.6% — argues the board approved a dilutive Bonanza Creek acquisition that nuked $100mm of market cap, summarily rejected a Midstates Petroleum merger with $70mm of synergies, paid $23.7mm in severance to a CEO it terminated 'without cause,' and adopted an unprecedented 'wolf pack' poison pill that even Wachtell criticized. The stock trades at $13.98 versus management's own PV-10 of $57/share, a ~45% discount to proved reserves alone. Icahn is nominating seven directors at the June 19, 2018 annual meeting to run a genuine strategic sale process or, failing that, redirect capital from the dying Mississippian Lime to the NW STACK and North Park inventory.
SCQA
SandRidge Energy is a pure-play E&P that emerged debt-free from Chapter 11 in October 2016 with assets in the Mississippian Lime, NW STACK, and North Park Niobrara, run by a board largely seated through the bankruptcy process.
In 18 months the board approved a dilutive Bonanza Creek deal that vaporized $100mm of market cap, rejected a Midstates merger with $70mm of synergies, awarded $23.7mm in severance, and adopted an unprecedented poison pill — while shares fell 27%.
Vote out the five-member 'bankruptcy board' at the June 19 annual meeting, install Icahn's slate of seven nominees, reject the poison pill ratification and executive comp plan, and run a true strategic sale process.
Closing the discount to PV-10 implies up to ~$57/share versus today's $13.98 — a ~4x move; even pricing at peer NTM EBITDA multiples (5.2x vs. SandRidge's 2.4x) re-rates the equity dramatically.
The three reasons
- 1
SandRidge trades at a ~45% discount to its own PV-10 of ~$57/share vs $13.98 stock
- 2
Board approved dilutive Bonanza deal, rejected Midstates merger, paid $23.7mm severance to fired CEO
- 3
Adopted a 'wolf pack' poison pill so egregious even Wachtell publicly criticized the structure
Primary demands
- Replace the five-member 'bankruptcy board' with Icahn's slate of seven director nominees at the June 19, 2018 annual meeting
- Run a true strategic sale process open to all bidders (including a potential all-cash Icahn offer subject to disinterested-shareholder approval)
- Reject ratification of the dilutive 'wolf pack' poison pill
- Vote against the say-on-pay proposal covering egregious executive compensation
- Refocus capital away from the dying Mississippian Lime toward NW STACK and North Park inventory
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
The 'Bankruptcy Board': Bill Griffin...
Present
Present
Present
Present
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Yes
Yes
Active
3/5
N:4 V:3
Precedents cited
- Apple (improved capital allocation)
- eBay (spun off PayPal)
- Forest Labs (sold to Actavis)
- Motorola (split up and sold to Google)
- ImClone (sold to Eli Lilly)
- Kerr McGee (sold to Anadarko)
- Chesapeake Energy
- Netflix
- Herbalife
- Federal Mogul
- CVR Energy
Notable slides (6)
Notes
Classic Icahn proxy-fight deck for the June 19, 2018 SandRidge annual meeting. Co-branded layout uses SandRidge's own logo and palette in the header/footer rather than Icahn branding — a subtle rhetorical move framing the deck as 'on behalf of' the company. Heavy use of the 'bankruptcy board' epithet and a side-by-side of management's self-praise quote ('We are proud of the results') against a stock chart showing -34% vs peers +48%. Page 11 names every director with personal track-record critiques (an unusually direct villain table). Page 9 stacks three peer-gap bar charts (EV/EBITDA, EV/PV-10, EV/flowing barrel) — useful swipe. Stake explicitly disclosed at 13.6%. Icahn signals he might himself bid all-cash subject to a disinterested-shareholder vote — an unusual pre-commitment.