One of SandRidge Energy Inc's top shareholders called for the oil and gas company to consider selling itself and for Chief Executive Tom Ward to step down, saying management's strategy has been incoherent, unpredictable and volatile.
Hedge fund TPG-Axon, which said it owns more than 4.5 percent of SandRidge and has about $4 billion in assets under management, on Thursday sent the company a letter that also urges a shakeup of the U.S. oil and gas company's board.
The hedge fund repeatedly compared SandRidge to Chesapeake Energy Corp, which has been besieged by a governance crisis and liquidity crunch. Ward co-founded Chesapeake with Aubrey McClendon in 1989. Ward joined SandRidge in 2006 and took the company public the following year.
TPG-Axon said in the letter it believes SandRidge could be worth $12 to $14 per share, compared with its $6 closing price on Wednesday.
SandRidge shares closed 1.7 percent higher at $6.10 on Thursday. The company's current market value is around $3.2 billion.
SandRidge stock performance has been nothing short of disastrous, on both an absolute and relative basis, since the company's IPO in 2007, TPG-Axon founder Dinakar Singh wrote in a letter to the SandRidge board.
The shares have lost more than three-quarters of their value compared with their IPO price of $26. That compares with a 4 percent drop in the Dow Jones index of U.S. oil companies.
Singh pointed to what he called appalling corporate governance and reckless spending that has resulted in repeated financial emergencies, and caused massive dilution, soaring cost of capital, and unnecessary risks for shareholders.
SandRidge acknowledged in a statement that it needs to improve performance for shareholders and said it is open to constructive engagement with its investors.
The Oklahoma City, Oklahoma-based company focuses on exploration and production primarily in the Permian Basin and the Mid-Continent region of the United States. It is the leading operator in the Mississippian Oil Play of northern Oklahoma and western Kansas, and also has operations in the Gulf of Mexico.
You look at shareholder returns, you look at consistent outspending of capital, you look at the pivots on strategy and their approach ... First they're onshore, then they're offshore, then they're gas, then they're oil, said Mark Hanson, analyst at Morningstar.
It's a little bit of a roller-coaster and it's almost too much to stomach if you're a shareholder.
After the close of trading on Thursday, SandRidge reported a third-quarter net loss of $184 million and said it