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Acquisitions and Divestitures - Dynamic Acquisition - Preliminary Estimated Values of Assets Acquired and Liabilities Assumed (Details) (Dynamic Acquisition, USD $)
In Thousands, except Per Share data, unless otherwise specified
 0 Months Ended
Apr. 17, 2012
Dynamic Acquisition
  
Consideration  
Shares of SandRidge common stock issued (in shares) 73,962 [1]
SandRidge common stock price (in dollars per share) $ 7.33 [1]
Fair value of common stock issued $ 542,138 [1]
Cash consideration 680,000 [1],[2]
Cash balance adjustment 13,091 [1],[3]
Total purchase price 1,235,229 [1]
Estimated Fair Value of Liabilities Assumed  
Current liabilities 129,363
Asset retirement obligations 315,922 [4]
Long-term deferred tax liability 100,288 [5]
Other non-current liabilities 4,469
Amount attributable to liabilities assumed 550,042
Total purchase price plus liabilities assumed 1,785,271
Estimated Fair Value of Assets Acquired  
Current assets 142,027
Oil and natural gas properties 1,746,753 [6]
Other property, plant and equipment 1,296
Other non-current assets 17,891
Amount attributable to assets acquired 1,907,967
Bargain purchase gain $ (122,696) [7]
[1] Consideration paid by the Company consisted of 74 million shares of SandRidge common stock and cash of approximately $680.0 million. The value of the stock consideration is based upon the closing price of $7.33 per share of SandRidge common stock on April 17, 2012, which was the closing date of the Dynamic Acquisition. Under the acquisition method of accounting, the purchase price is determined based on the total cash paid and the fair value of SandRidge common stock issued on the acquisition date.
[2] Cash consideration paid, including amounts paid to retire Dynamic’s long-term debt, was funded through a portion of the net proceeds from the Company’s issuance of $750.0 million of unsecured 8.125% Senior Notes due 2022.
[3] In accordance with the acquisition agreement, the Company remitted to the seller a cash payment equal to Dynamic’s average daily cash balance for the 30-day period ending on the second day prior to closing. This resulted in an additional cash payment by the Company of $13.1 million at closing.
[4] The estimated fair value of the acquired asset retirement obligation was determined using the Company’s credit adjusted risk-free rate.
[5] The net deferred tax liability is primarily a result of the difference between the estimated fair value and the Company’s expected tax basis in the assets acquired and liabilities assumed. The net deferred tax liability also includes the effects of deferred tax assets associated with net operating losses and other tax attributes acquired as a result of the Dynamic Acquisition.
[6] The fair value of oil and natural gas properties acquired was estimated using a discounted cash flow model, with future cash flows estimated based upon projections of oil and natural gas reserve quantities and weighted average oil and natural gas prices of $113.62 per barrel of oil and $3.83 per Mcf of natural gas, after adjustment for transportation fees and regional price differentials. The commodity prices utilized were based upon commodity strip prices as of April 17, 2012 for the first four years and escalated for inflation at a rate of 2.0% annually beginning with the fifth year through the end of production. Future cash flows were discounted using an industry weighted average cost of capital rate.
[7] The bargain purchase gain results from the excess of the fair value of net assets acquired over consideration paid and, as additional information becomes available, is subject to adjustment. To validate the estimated bargain purchase gain on this acquisition, the Company reviewed its initial identification and valuation of assets acquired and liabilities assumed. The Company believes it was able to acquire Dynamic for less than the estimated fair value of its net assets due to their offshore location resulting in less bidding competition.