Ladies and gentlemen, thank you for joining us and welcome to SandRidge Energy's second quarter 2026 conference call. Operator instructions followed. I will now hand the conference over to Scott Prestridge, Senior Vice President of Finance and Strategy. Scott, please go ahead.
Thank you and welcome everyone. With me today are Grayson Prather, our CEO; Jonathan Frates, our Chairman; Brandon Brown, our CAO; and Dean Parrish, our COO. We'd like to remind you that today's call contains forward-looking statements and assumptions that are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. These statements are not guarantees of future performance, and our actual results may differ materially due to known and unknown risks and uncertainties as discussed in greater detail in our earnings release and our SEC filings. We may also refer to adjusted EBITDA and adjusted G&A and other non-GAAP financial measures. Reconciliations of these measures can be found on our website. With that, I'll turn the call over to Grayson.
Thank you, and good afternoon. I'm pleased to report on a strong quarter and first half for the company. We continue to grow year-over-year production and revenue, driven primarily by our operating development program and higher commodity prices. We also announced a bolt-on acquisition that expands our footprint in the Cherokee play. Before getting into this and other highlights, I will turn things over to Jonathan for details on financial results.
Thanks, Grayson. During the quarter, the price of oil averaged roughly $95 per barrel, while the price of natural gas fell to just above $3. The company grew production to 19.7 Mboe per day, representing an increase of 11% year over year on a BOE basis. Oil increased 22% over the same period. We generated revenues of just over $51 million, a 48% increase year over year, and adjusted EBITDA of $34 million, a 49% increase over the same period. As always, we continue to manage the business with the goal of maximizing long-term cash flow while growing production and utilizing our NOLs to shield us from income taxes. At the end of the quarter, cash, including restricted cash, was approximately $115 million, which represents roughly $3.09 per common share outstanding. The company paid $10.6 million in dividends during the quarter, which included our regular way dividend of 13 cents per share and the previously announced one-time special dividend of 20 cents per share. Including special dividends, SandRidge has now paid $5.05 per share in dividends since the beginning of 2023. On August 4, 2026, the Board of Directors declared a 13 cents per share dividend payable on August 31 to shareholders of record on August 19, 2026. Shareholders may receive cash or additional shares of common stock through the company's dividend reinvestment plan. The unhedged price realization for the quarter, before considering the impact of hedges, was $95.35 per barrel of oil, $1.36 per Mcf of gas, and $21.68 per barrel of NGL. This compares to first quarter realizations of $71.11 per barrel of oil, $3.13 per Mcf of gas, and $18.64 per barrel of NGL. While oil prices rose during the quarter, the realized price of natural gas fell meaningfully, primarily due to widening regional price differentials. Our commitment to cost discipline continues to yield results with adjusted G&A for the quarter of approximately $2.7 million or $1.52 per BOE, compared to $2.4 million or $1.48 per BOE in the second quarter of 2025. Net income was approximately $27 million for the quarter, or $0.72 per common share, and adjusted net income was approximately $21 million, or $0.57 per share. This compares to $19.6 million or $0.53 per common share and $12.2 million or $0.33 per share respectively during the same period last year. The company generated cash flow from operations of $42.4 million during the quarter, compared to $22.9 million during the same period last year, with adjusted operating cash flow of $34.6 million during the quarter compared to $25.6 million in the same period of 2025. The company continues to have no debt and expects to fund all 2026 capital expenditures and capital returns with cash flows from operations during the year. Lastly, our production is hedged with a combination of swaps and collars representing just under 30% of the midpoint of our 2026 guidance. This includes 37% of natural gas production and 43% of oil. These hedges will help secure a portion of our cash flows and support our drilling program through the year. We continue to monitor prices to take advantage of favorable opportunities, but plan to maintain meaningful upside throughout the remainder of the year. Before shifting to our outlook, we should note that our earnings release and 10-Q will provide further details on our financial and operational performance during the year. I will turn it over to Dean for an update on operations.
Thank you, Jonathan. Let's start with a review of the second quarter, then discuss recent drilling and completion results. Total capital spend for the quarter excluding A&D was $16.3 million, which is better than expected for the quarter, mostly due to activity timing. The rigorous bidding process focused on driving drilling and completion costs down in the Cherokee play, and longer artificial lift run times from previous years of improvements also contributed. Additionally, we have been securing critical well components needed for the remainder of the year to minimize any supply or inflationary pressures that may affect our capital program. Lease operating expenses for the quarter were $10.3 million, or $5.73 per BOE, which falls right in line with expectations. We are also securing the equipment and services that will be critical for production operations in 2026, similar to the capital program. We expect to continue to see pressure on diesel costs through fuel surcharges passed on through service providers that have strict internal protocol to reduce surcharges when diesel prices begin to decrease. During the quarter, the company successfully brought two wells online from our operated 1-rig Cherokee drilling program. We recently brought online two additional wells in July and are drilling the sixth out of 10 wells for the year. Our operations team continues to execute, with the fourth well that was drilled being the fastest, lowest well cost to date. In addition to Cherokee development, the operations team successfully recompleted a shut-in legacy well to an up-hole zone with initial production rates of 1,400 Mcf per day and 4 barrels of oil per day, exceeding expectations. We will continue to focus on lower drilling and completion costs while looking for opportunities to extract additional value from legacy assets. Moving to our 2026 capital program, we plan to drill 10 operated Cherokee wells with 1 rig this year and complete nine wells. The remaining completion is anticipated to carry over to next year. A majority of the remaining wells in our development program this year directly offset producing or in-progress wells in the area, and we continue to monitor offsetting results. Gross well costs vary by depth, but are estimated to be between approximately $9 million and $11 million. We intend to spend between $76 million and $97 million in our 2026 capital program, which is made up of $62 million to $80 million in drilling and completions activity, and between $14 million and $17 million in capital workovers, production optimization, and selective leasing in the Cherokee play. Our high-graded leasing is focused on further bolstering our interest, consolidating our position, and extending development into future years. With that, I will turn things back over to Grayson.
Thank you, Dean. Let's begin with the recently announced Cherokee acquisition. On June 29, we signed an agreement to acquire certain producing assets and leasehold interests in the Cherokee play, expanding our efficient operations in the area with the addition of 7,000 net leasehold acres and interest in 21 wells, including interest in four SandRidge operated wells. The proved undeveloped leasehold includes four 2.5-mile wells and four 2-mile wells, which immediately offset our core position in Roger Mills County. The average 30-day IP for the operated producing wells we're acquiring is more than 2,100 BOE per day with 58% oil. We view this as a very complementary bolt-on that expands our footprint in the Mid-Continent by adding quality oil-weighted production and bolstering our Cherokee inventory with acreage that immediately offsets our current drilling and leasing programs. We anticipate closing this acquisition in the third quarter and will then focus on integrating the new assets, applying our low-cost know-how to operations. We currently do not plan to add people as a result of the acquisition. Now, let's pivot over to the development program. As Dean discussed, we had first production on two wells this past quarter. One well targeted the Cherokee Shale in our core area, which had a peak 30-day average production rate of approximately 2,000 BOE per day, consistent with the surrounding wells in the area. The other well turned in line this quarter was a step out from our core area and tested a sub-member of the larger Cherokee formation immediately below the Cherokee Shale. This well had an initial 30-day average rate of more than 10,000 Mcf per day and more than 100 barrels of oil per day on a two-stream basis. The 90-day average rate is approximately 11,000 Mcfe per day and cumulative production after 100 days is over 1 billion cubic feet. We are seeing exceptionally flat production from this well. While we are still assessing long-term recoveries, initial estimates are very promising. This well result allows us to better establish performance expectations in a new target and area that will help us evaluate the economics and potential development opportunity in the future. To that end, we are assessing whether this new target and the Cherokee Shale are truly unique reservoirs and the potential for stacked pay, which, if confirmed, could provide further development options for gas. However, we plan to be deliberate and patient as we observe more production history and gather more information to aid in analysis and future decision making. Given the tailwind of WTI prices and the enhancement to returns, we plan to continue our Cherokee development with 1 rig and further grow oil production. The program is attractive in a range of commodity environments. Our team will continue to be diligent in monitoring results, prioritizing full-cycle returns and reasonable reinvestment rates, and, when needed, exercise drill schedule flexibility to make prudent adjustments to our development plans. I'm very pleased with our team for their continued focus on safety, execution, and cost focus in the development and production optimization program. They are truly championing safety, resulting in the continuation of our record of more than four and a half years without a recordable safety incident. We continue to operate at a high level with a lean, but very engaged and experienced staff, with peer-leading operating and administrative cost efficiencies. I'd like to pause here to highlight the optionality we have across our asset base, coupled with the strength of our balance sheet that sets us up to leverage commodity price cycles. The combination of our oil-weighted Cherokee and gas-weighted legacy assets, as well as a robust net cash position, give us multi-faceted options to maneuver and take advantage of different commodity cycles. Put simply, we have a strong balance sheet and a versatile kit bag, which makes the company more resilient and better poised to maneuver and adjust no matter the commodity cycle. We'll now revisit the company's advantages. Our asset base is focused in the Mid-Continent region with a PDP well set that provides meaningful cash flow, which has a shallowing and diversified production profile, a double-digit reserve life, and does not require any routine flaring of produced gas. Our incumbent assets include more than 1,000 miles each of owned and operated SWD and electrical infrastructure over our footprint, which among other factors helps de-risk individual well profitability for a majority of our legacy producing wells down to roughly $40 WTI and $2 Henry Hub. Our assets continue to yield free cash flow. This cash generation potential provides several paths to increase shareholder value realization and is benefited by a low G&A burden. SandRidge's value proposition is materially de-risked from a financial perspective by our strength and balance sheet, including negative net leverage, financial flexibility, and advantaged tax position. We have bolstered our inventory to provide further organic growth opportunities and incremental oil diversification with low break-evens in high-graded areas. Finally, it is worth highlighting that we take our ESG commitment seriously and we have implemented disciplined processes around them. Not only do we continue to operate our existing asset base extremely efficiently and execute on our Cherokee development in an effective manner, but we do so safely. Shifting to strategy, we remain committed to growing the value of our business in a safe, responsible, and efficient manner while prudently allocating capital to high-return growth projects. We also evaluate merger and acquisition opportunities while maintaining financial discipline, consideration of our balance sheet, and commitment to our capital return program. This strategy has five points. One, maximize the value of our incumbent Mid-Con PDP assets by extending and flattening our production profile with high-return production optimization projects, as well as continuously pressing on operating and administrative costs. Two, capital stewardship in investment projects and opportunities that have attractive returns and target reasonable reinvestment rates that sustain free cash flow while prioritizing a regular way dividend. Three, maintain optionality to execute on value-accretive merger and acquisition opportunities that could bring synergies, leverage the company's core competencies, complement our portfolio of assets, further utilize approximately $1.5 billion of federal NOLs, or otherwise yield attractive returns. Four, as we generate cash, we will continue to work with our Board to assess paths to maximize shareholder value, including investment in strategic opportunities, advancement of our return of capital program, and other uses. To this end, the Board continues to focus on the company's return of capital to stockholders, and as a result, expanded our ongoing dividend program last quarter by 8%. And the final staple is to uphold our ESG responsibilities.
Thank you, Grayson. As we wind up our prepared remarks, I will point out our second quarter adjusted G&A of $2.7 million or $1.52 per BOE continues to lead among our peers. The consistent efficiency of our organization reflects our core values to remain cost disciplined and to be fit for purpose. We will maintain our efficient and low-cost operation mindset and continue to focus on the proper weighting of field versus corporate personnel to reflect where we create the most value. The outsourcing of our more perfunctory activities, such as operations accounting, land administration, IT, tax, and HR, has allowed us to operate with a total personnel of just over 100 people for the past several years, while retaining key technical skill sets that have both experience and institutional knowledge of our business. In summary, at the end of the second quarter, the company had approximately $115 million in cash and cash equivalents, which represents approximately $3.09 per share of our common stock outstanding. We have an inventory of high rate of return, low break-even projects, low overhead, top-tier adjusted G&A, no debt, negative net leverage, a flattening production profile, double-digit reserve life, and approximately $1.5 billion of federal NOLs. This concludes our prepared remarks. Thank you for joining us today. We will now open the call to questions.
Operator instructions followed. There are no questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.