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SandRidge Faces Bankruptcy Rumors; Norman Sees Significant Construction Boom

Apr 1, 2016

One of Oklahoma City’s major energy producers unveiled its latest earnings reports earlier this week.

It wasn’t good news – it really hasn’t been for any of the state’s energy giants as they continue to feel the effects of this nearly two-year downturn in commodity prices . On Tuesday, SandRidge Energy announced it lost $74 million in the fourth quarter of 2015 – down 58 percent year-over-year and missing Wall Street expectations.

That all means they’re going to cut drilling back by 60 percent in 2016, according to The Journal Record’s Sarah Terry-Cobo:

The driller has two active rigs in Oklahoma’s Mississippi Lime play and one in Colorado’s Niobrara play, according to the Tuesday regulatory filing. SandRidge started drilling its first well in its recently acquired Niobrara assets in January. It intends to drill 22 lateral well bores there in 2016.

The company plans to cut back to one rig in each state in May. SandRidge’s spending plans depend on several variables, including commodity prices and available cash, and could change, according to the filing.

There were also media reports this week SandRidge is considering bankruptcy. The Journal Record’s managing editor Adam Brooks says those rumors are based on the company’s hiring of legal and financial advisers, and warnings in Securities and Exchange Commission filings about the possibility of Chapter 11.

“Right now they just might not be able to pay their debts if they continue to get bad,” Brooks said. “That could mean filing for bankruptcy protection so that they have time to restructure.”

Chesapeake Energy fought off similar bankruptcy rumors last month because of financial advisers it hired much, much earlier. It caused a sharp drop in the company’s stock price.

“Really it didn’t return to decent prices until after the indictment and death of their founder and former CEO Aubrey McClendon,” Brooks said. “It’s not really clear why those affected the stock market.”

Construction is underway on the 430-unit University Apartments complex on Brooks Street in Norman. The project is expected to be complete by August 2017.
Credit Brian Hardzinski / KGOU

Norman Boom

Despite all the grim news associated with the current economic climate, it’s a good time to be a contractor in Norman.

In 2015, the city saw $90 million in new development last year, and that doesn’t include University of Oklahoma construction or projects worth less than $500,000. Most of the construction are apartment complexes and new retail, The Journal Record’s Michael Clements reports:

The three largest projects from 2015 are the Aspen Heights Norman on Steamboat Way, an 83-unit student housing project worth $8.7 million; the $17.7 million Avenue Apartments on 12th Avenue SE; and the 196-unit, $23 million Millennium Apartments on E. Lindsey Street.

The list doesn’t include OU projects because the college isn’t required to seek city permits for work on its campus. Still, Kaplan said improvements to the campus benefit the city. Just northeast of the college’s stadium expansion is a $53.5 million project. Construction is underway on the 430-unit University Apartments complex on Brooks Street. The project is expected to be complete by August 2017.

Brooks says there’s also significant industrial investment, as well.

“There's a company called Evans Enterprises that is spending $2.7 million on some office and manufacturing space for electric motors,” Brooks said. “There's a company called IMMY that does some biological stuff. They're planning an $8 million expansion at the business park on 24th.”

Last year Norman voters approved a half-cent sales tax increase, which means there will be an uptick in public projects and new amenities over the next several years. On Tuesday residents will head to the polls to elect a new mayor, city councilors, and decide on a charter revision and bond issues.

The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.

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