Tomahawk, WI 8/14/2013 (Basicsmedia) – SandRidge Energy Inc. (NYSE:SD) hasn’t had the best of times lately. This company has gone through a turbulent period culminating in a lot of resentment being raised by investors and shareholders alike. Even some of the biggest supporters of SD have chosen to voice their concerns aloud in the hope that the company will do something to turn the tide around to its favor, rather than against it, like has been happening for a while now. Earlier this year, the company announced major changes in the composition of its top managers. Was it enough?

SD has been facing problems from myriad sources. One of the challenges which the company has to find a way of resolving is in the area of its not so stellar asset base. The company’s assets are nothing to write home about. Secondly, it has been noted that the company also suffers from lack of proper growth catalysts and this does not augur well for its future, thus creating a lot of doubt in the minds of its shareholders. In essence, most analysts are of the opinion that this company will probably continue underperforming for some time.

What Can SD Do To improve Its Financial Status?

It is almost unheard of for a company operating in the natural gas and oil industry to struggle in the manner which has been seen in SandRidge Energy. This is a company which has even reported losses at a time when others are reporting profits, and overall growth. All is not lost for SD, since there are a few measures it can take to reassure its investors that it thinks about its long term future. However, the challenge is massive considering that its assets at Mississippi and Gulf of Mexico are not things which give investors a lot of confidence going forward.

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Image is from https://www.google.com/finance and shows SD’s revenue, net income and profit margins trends from 2012-2013.

SD can always decide to carry out a massive cut of its overhead costs. This could help free up some funds, which would then be used in other areas which are critical to the company’s existence, and return it to its profitable ways. Similarly, reports have started emerging to the effect that SandRidge may decide to sell its underperforming assets in Mississippi and Gulf of Mexico. Such a move would be designed to reduce the debt which the company currently owes and is still unable to pay or clear. Selling these underperforming assets makes economical sense.

Can SD Repay Its Debts in Full by Selling Its Underperforming Assets?

SD’s assets in the Gulf of Mexico are worth $1.15 billion, compared to those at Mississippi which are valued at around $450 million. Even if the company was able to sell its assets and recoup exactly what they are worth, the money it raises through such an act would be insufficient in paying the debt it owes back in full. The most which SD can hope for is to reduce the debt by paying a percentage of the same, with an undertaking made to those it owes on how it will make the rest of the payments. This company is in trouble which it needs to get out of soon.

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