Remember Sandridge Energy (
OTO:SDOC,
Forum)? It used to be a thing.
An NYSE-listed energy giant in the natural gas game, its shares ran to over $63 back in 2008, before plummeting to the $7 range that same year.
Despite being a one-time many-comma sized energy company, with 25 operational rigs as of late 2014, the company now languishes on the OTC Pinks where it’s stock is kicked around along sized regional energy drink producers and Bitcoin exchanges nobody has heard of.
Sandridge’s troubles began when shareholders accused then CEO Tom Ward of front-running the company using a family-owned company that, they alleged, was buying energy assets off third parties and then leasing them or selling them back to Sandridge.
The CEO took a $90 million golden parachute to make that problem go away, then promptly started another energy company, Tapstone Energy, which going by the amount of
self-congratulation on the corporate website might as well be renamed Tom Ward Is Awesome Inc.
But those troubles were maximized as the company dealt with a downturn in the energy sector by taking out large loans to keep on acquiring, and later struggled further when its debt load meant it could service its interest payments, but would have nothing left to develop the wells it had purchased.
The company with a $17m market cap today has debts of around $4 billion to deal with.
Sandridge recently decided to hand over one of its assets when a core supplier contract with a subsidiary of Occidental (
NYSE:OXY,
Forum) became unprofitable to continue with. Faced with tens of millions in penalties if it defaulted, the company simply tossed the keys on the table, paid $11m cash, and left the room.
This week has seen Sandridge’s clock cleaned on the OTC, dropping from $0.065 at the open Monday to $0.0295 at the time of writing, more than halving its already decrepit market cap.
The company is working hard to emerge from its debt load, floating all sorts of
bankruptcy ideas, but it’s clear the punters are headed for the exits and with every half cent the stock drops, an energy angel loses its wings.
OUR TAKE:
Can you short a stock worth
one Zimbabwean dollar?
If you have a few hundred grand sitting around, maybe make an offer on a gas rig. You might just be the only one bidding..
PS: A note to InvestorNewswire, which pumped out a news item that claimed Sandridge was about to release quarterly results: Your
automated content algorithm needs work.
--Chris Parry
https://www.twitter.com/chrisparry