U.S. oil and gas producer SandRidge Energy Inc (SD.N) plans to slash its rig count
U.S. oil and gas producer SandRidge Energy Inc (SD.N) plans to slash its rig count in Oklahoma and Kansas by nearly 75 percent, according to a document obtained by Reuters.
The cuts, to be implemented through early April, may amount to what is arguably the most significant pullback in well drilling by a publicly traded shale oil company since crude prices started a 50 percent slide in June.
The document shows SandRidge plans to cut the number of rigs drilling in the Mississippi Lime formation in northern Oklahoma and southern Kansas in March and early April to eight, from 28. In November, the company told investors it had about 30 rigs running.
The document makes no mention of rigs in West Texas, where the company also has acreage. It laid off 25 workers in West Texas in January, state data shows.
A spokesman for SandRidge declined to comment but said the company would provide an update for 2015 on a quarterly results call on Feb. 27.
Many companies have reduced spending by 25 percent to 40 percent to conserve cash.
SandRidge has been hit particularly hard in the oil rout because it has a hefty debt load and it drills in the Mississippi Lime.
Mississippi Lime wells typically do not produce as much oil as other shale formations, and the rock also contains a lot of water, which is costly to haul away.
In early January, SandRidge Chief Executive James Bennett said the company was already reducing its rig count and capital spending, citing market conditions.
"Given the market backdrop, we are ... already reducing our rig count and capex levels," he said at the time.
Two of SandRidge's biggest investors include Canada's Prem Watsa and billionaire Leon Cooperman of Omega Advisors.