THREAD 1/ This is a play I have followed for years and now I am going to post on it. Most of you wont GAF. Its ok.

Sandridge Energy has been drilling a little Niobrara play in the North Park basin, which is an isolated Rockies basin in North Central Colorado.

2/ As a Geo, I appreciate a good exploration effort but you have to know when to call it quits.

I have the 5 Extended lateral wells (2 miles) with "modern completions" and on a spacing test spud late 2017. We'll focus on the Castle-Janet wells

(slides are from Nov 2017)

3/ This is the "type curve" from 2019 3Q call with B, Di, they show investors. Since I am not a Res Eng (cuz only they can forecast ), we'll just run with what SandRidge claims B= 1.2, Di = 78%

(This slide from Q3 2019)

4/ I have chosen those 5 wells bc there is over a year of data to model, "modern frack", 2 mile lateral, AND THEY WERE "GOOD". These were the best of the wells completed in late 2017, 2018. There were plenty of dogs to look at.

Shale companies have forgotten how to risk

5/ Here is the 5 wells from the spacing test with a type curve fitted over the top. I've used Dmin of 8% (generous IMO). again B = 1.2, Di = 78%, their numbers not mine.

Most of these wells look to be headed below curve but let's be optimistic for a second

6/ Here are my economic inputs/outputs. I have run this at $50 wellhead oil flat. They report a $4.50 deduct to NYMEX on oil pricing. I think $50 flat is fair.

This is simple single well model. I am guessing as to WI/NRI (help anyone?) LOE from guidance

7/ The LOE was taken from guidance. HOWEVER, they have significant legacy gas production which I would guess distorts LOE guidance on BOE basis lower. I think per barrel oil would be more

ALSO, these wells on AVERAGE have Water-Oil Ratio of 2 to 1

8/ I imagine water disposal in Colorado isn't cheap, so LOE is probably higher (much higher?) than I am using. But I'll be generous. And we won't even bring up G&A or Debt.

These wells AVG 91% Oil cut, and most of the gas is flared. Any sold is at CHEAP diff so was ignored

Conclusion: IRR of 23% and ROI of 0.28 seems pretty low to me on the single well half-cycle to keep drilling. This spacing test was supposed to be good indicator of full field potential

These guys torch cash every quarter, and it's not hard to see why

What say EFT? Short?