Condensed Consolidating Financial Information

The Company provides condensed consolidating financial information for its subsidiaries that are guarantors of its registered debt. As of March 31, 2014, the subsidiary guarantors, which are 100% owned by the Company, have jointly and severally guaranteed, on a full, unconditional and unsecured basis, the Company’s outstanding Senior Fixed Rate Notes. The subsidiary guarantees (i) rank equally in right of payment with all of the existing and future senior debt of the subsidiary guarantors; (ii) rank senior to all of the existing and future subordinated debt of the subsidiary guarantors; (iii) are effectively subordinated in right of payment to any existing or future secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such obligations; (iv) are structurally subordinated to all debt and other obligations of the subsidiaries of the guarantors who are not themselves subsidiary guarantors; and (v) are only released under certain customary circumstances. The Company’s subsidiary guarantors guarantee payments of principal and interest under the Company’s registered notes.

Certain of the Company’s wholly owned subsidiaries sold in February 2014, as discussed in Note 3, guaranteed the Company’s registered debt. Upon the closing of the sale, these subsidiaries were released from their guarantees. The condensed consolidating financial information in the tables below reflects these subsidiaries’ financial information through the date of the sale.

The following condensed consolidating financial information represents the financial information of SandRidge Energy, Inc., its wholly owned subsidiary guarantors and its non-guarantor subsidiaries, prepared on the equity basis of accounting. The non-guarantor subsidiaries, including consolidated VIEs, majority owned subsidiaries and certain immaterial wholly owned subsidiaries, are included in the non-guarantors column in the tables below. The financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the subsidiary guarantors operated as independent entities.

During the three-month period ended June 30, 2013, a revision was identified in the Company’s presentation of changes in intercompany advances (borrowings) in the condensed consolidating statement of cash flows. The intercompany advances (borrowings) represent cash flows between the Parent and the Guarantors and Non-Guarantors and are based on the Parent’s centralized treasury activities. Previously, the Company reflected the changes in intercompany advances (borrowings) in net cash provided by (used in) operating activities and such changes should have been reflected as a separate line within net cash provided by (used in) financing activities. The Company concluded these revisions were not material individually or in the aggregate to any of the historical condensed consolidating financial information. Accordingly, the Company revised its condensed consolidating statements of cash flows to reflect the changes in intercompany advances (borrowings) in cash flows from financing activities. These revisions had no impact on the Company’s consolidated financial statements or the other condensed consolidating financial information. The revisions related to each of the Parent, Guarantors and Non-Guarantors associated with cash flows from operating activities had corresponding offsetting impacts to cash flows from financing activities resulting in no impact to net increase (decrease) in cash and cash equivalents. Net cash provided by (used in) operating activities increased (decreased) and net cash provided by (used in) financing activities decreased (increased) by the same amount as shown in the table below for the historical three-month period ended March 31, 2013.



	Three Months Ended March 31, 2013
	(In thousands)
Parent	$	(2,287,259	)
Guarantors	$	2,297,970
Non-Guarantors	$	(10,711	)

Condensed Consolidating Balance Sheets



	March 31, 2014 (Restated)
	Parent(1)		Guarantors(2)(3)		Non-Guarantors		Eliminations(1)(2)			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	1,170,581	$	1,527	$	7,536	$	—		$	1,179,644
Accounts receivable, net	—		270,092		23,673		—			293,765
Intercompany accounts receivable	56,521		1,351,683		59,095		(1,467,299		)	—
Derivative contracts	—		5,702		9,986		(6,686		)	9,002
Prepaid expenses	—		13,509		58		—			13,567
Other current assets	1,375		28,470		122		—			29,967
Total current assets	1,228,477		1,670,983		100,470		(1,473,985		)	1,525,945
Property, plant and equipment, net	—		4,130,353		1,121,873		—			5,252,226
Investment in subsidiaries	5,960,279		21,969		—		(5,982,248		)	—
Derivative contracts	—		18,048		4,471		(4,471		)	18,048
Other assets	66,550		21,367		23		(5,902		)	82,038
Total assets	$	7,255,306	$	5,862,720	$	1,226,837	$	(7,466,606	)	$	6,878,257
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses	$	157,676	$	429,223	$	3,186	$	—		$	590,085
Intercompany accounts payable	1,355,653		72,815		38,831		(1,467,299		)	—
Derivative contracts	—		20,861		—		(6,686		)	14,175
Other current liabilities	6,987		9,480		—		—			16,467
Total current liabilities	1,520,316		532,379		42,017		(1,473,985		)	620,727
Investment in subsidiaries	851,437		145,150		—		(996,587		)	—
Long-term debt	3,200,938		—		—		(5,902		)	3,195,036
Derivative contracts	—		4,471		—		(4,471		)	—
Asset retirement obligations	—		53,103		—		—			53,103
Other long-term obligations	1,398		18,775		—		—			20,173
Total liabilities	5,574,089		753,878		42,017		(2,480,945		)	3,889,039
Equity
SandRidge Energy, Inc. stockholders’ equity	1,681,217		5,108,842		1,184,820		(6,293,662		)	1,681,217
Noncontrolling interest	—		—		—		1,308,001			1,308,001
Total equity	1,681,217		5,108,842		1,184,820		(4,985,661		)	2,989,218
Total liabilities and equity	$	7,255,306	$	5,862,720	$	1,226,837	$	(7,466,606	)	$	6,878,257

____________________

(1)

Amounts presented as Investment in subsidiaries have been revised to present negative investments in certain subsidiaries, totaling $851.4 million, as liabilities and to present $55.6 million Parent gain on sale of subsidiary with full cost pool assets in 2012 as a reduction to Guarantor full cost pool (property, plant and equipment, net) and a reduction to Parent equity. Gain on sale of subsidiary was previously classified as an adjustment to the consolidated full cost pool through elimination in the condensed consolidating balance sheets. The impact of these revisions was not material to any previously issued financial statements.

(2)

Amounts presented as Investment in subsidiaries have been revised to present negative investments in certain subsidiaries, totaling $145.2 million, as liabilities. Property, plant and equipment, net has been revised to present $55.6 million Parent gain on sale of subsidiary with full cost pool assets in 2012 as a reduction to the Guarantor full cost pool (property, plant and equipment, net) and a reduction to Guarantor equity. Gain on sale of subsidiary was previously classified as an adjustment to the consolidated full cost pool through elimination in the condensed consolidating balance sheets. The impact of these revisions was not material to any previously issued financial statements.


(3)	Guarantor and Consolidated accounts payable and accrued expenses have been restated to reflect accrual of the CO₂ delivery shortfall penalty. See Note 2.



	December 31, 2013 (Revised)
	Parent(1)		Guarantors(2)		Non-Guarantors		Eliminations(1)(2)			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	805,505	$	1,013	$	8,145	$	—		$	814,663
Accounts receivable, net	—		326,345		22,873		—			349,218
Intercompany accounts receivable	153,325		982,524		70,107		(1,205,956		)	—
Derivative contracts	—		7,796		14,748		(9,765		)	12,779
Prepaid expenses	—		39,165		88		—			39,253
Other current assets	1,376		24,410		124		—			25,910
Total current assets	960,206		1,381,253		116,085		(1,215,721		)	1,241,823
Property, plant and equipment, net	—		5,125,543		1,182,132		—			6,307,675
Investment in subsidiaries	6,009,603		49,418		—		(6,059,021		)	—
Derivative contracts	—		12,650		9,585		(8,109		)	14,126
Other assets	61,923		65,123		27		(5,902		)	121,171
Total assets	$	7,031,732	$	6,633,987	$	1,307,829	$	(7,288,753	)	$	7,684,795
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses	$	207,572	$	601,074	$	3,842	$	—		$	812,488
Intercompany accounts payable	967,365		181,573		57,018		(1,205,956		)	—
Derivative contracts	—		44,032		—		(9,765		)	34,267
Asset retirement obligations	—		87,063		—		—			87,063
Total current liabilities	1,174,937		913,742		60,860		(1,215,721		)	933,818
Investment in subsidiaries	828,794		152,266		—		(981,060		)	—
Long-term debt	3,200,809		—		—		(5,902		)	3,194,907
Derivative contracts	—		28,673		—		(8,109		)	20,564
Asset retirement obligations	—		337,054		—		—			337,054
Other long-term obligations	1,382		21,443		—		—			22,825
Total liabilities	5,205,922		1,453,178		60,860		(2,210,792		)	4,509,168
Equity
SandRidge Energy, Inc. stockholders’ equity	1,825,810		5,180,809		1,246,969		(6,427,778		)	1,825,810
Noncontrolling interest	—		—		—		1,349,817			1,349,817
Total equity	1,825,810		5,180,809		1,246,969		(5,077,961		)	3,175,627
Total liabilities and equity	$	7,031,732	$	6,633,987	$	1,307,829	$	(7,288,753	)	$	7,684,795

____________________

(1)

Amounts presented as Investment in subsidiaries have been revised to present negative investments in certain subsidiaries, totaling $828.8 million, as liabilities and to present $55.6 million Parent gain on sale of subsidiary with full cost pool assets in 2012 as a reduction to Guarantor full cost pool (property, plant and equipment, net) and a reduction to Parent equity. Gain on sale of subsidiary was previously classified as an adjustment to the consolidated full cost pool through elimination in the condensed consolidating balance sheets. The impact of these revisions was not material to any previously issued financial statements.

(2)

Amounts presented as Investment in subsidiaries have been revised to present negative investments in certain subsidiaries, totaling $152.3 million, as liabilities. Property, plant and equipment, net has been revised to present $55.6 million Parent gain on sale of subsidiary with full cost pool assets in 2012 as a reduction to the Guarantor full cost pool (property, plant and equipment, net) and a reduction to Guarantor equity. Gain on sale of subsidiary was previously classified as an adjustment to the consolidated full cost pool through elimination in the condensed consolidating balance sheets. The impact of these revisions was not material to any previously issued financial statements.

Condensed Consolidating Statements of Operations



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2014 (Restated)
Total revenues	$	—		$	379,050		$	64,093		$	(87	)	$	443,056
Expenses
Direct operating expenses(1)	—			138,402			4,810			(87		)	143,125
General and administrative	148			36,947			1,443			—			38,538
Depreciation, depletion, amortization and accretion	—			120,577			15,876			—			136,453
Impairment	—			122,466			42,313			—			164,779
Loss on derivative contracts	—			34,102			8,389			—			42,491
Total expenses(1)	148			452,494			72,831			(87		)	525,386
Loss from operations(1)	(148		)	(73,444		)	(8,738		)	—			(82,330		)
Equity earnings from subsidiaries	(73,985		)	(2,777		)	—			76,762			—
Interest (expense) income	(62,186		)	143			—			—			(62,043		)
Other income, net	—			2,093			1			—			2,094
Loss before income taxes(1)	(136,319		)	(73,985		)	(8,737		)	76,762			(142,279		)
Income tax expense	17			—			110			—			127
Net loss(1)	(136,336		)	(73,985		)	(8,847		)	76,762			(142,406		)
Less: net loss attributable to noncontrolling interest	—			—			—			(6,070		)	(6,070		)
Net loss attributable to SandRidge Energy, Inc.(1)	$	(136,336	)	$	(73,985	)	$	(8,847	)	$	82,832		$	(136,336	)

____________________


(1)	Guarantor and Consolidated direct operating expenses have been restated to reflect accrual of the CO₂delivery shortfall penalty. See Note 2.



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2013 (Restated)
Total revenues	$	—		$	440,318		$	77,536		$	(6,164	)	$	511,690
Expenses
Direct operating expenses(1)	—			171,507			12,241			(5,732		)	178,016
General and administrative	87			76,819			2,970			(432		)	79,444
Depreciation, depletion, amortization and accretion	—			159,890			22,751			—			182,641
Loss on derivative contracts	—			30,900			9,997			—			40,897
Loss on sale of assets	—			290,956			107,218			—			398,174
Total expenses(1)	87			730,072			155,177			(6,164		)	879,172
Loss from operations(1)	(87		)	(289,754		)	(77,641		)	—			(367,482		)
Equity earnings from subsidiaries	(314,780		)	(26,641		)	—			341,421			—
Interest (expense) income	(86,103		)	193			—			—			(85,910		)
Loss on extinguishment of debt	(82,005		)	—			—			—			(82,005		)
Other income (expense), net	—			1,422			(811		)	—			611
Loss before income taxes(1)	(482,975		)	(314,780		)	(78,452		)	341,421			(534,786		)
Income tax expense	4,321			—			108			—			4,429
Net loss(1)	(487,296		)	(314,780		)	(78,560		)	341,421			(539,215		)
Less: net loss attributable to noncontrolling interest	—			—			—			(51,919		)	(51,919		)
Net loss attributable to SandRidge Energy, Inc.(1)	$	(487,296	)	$	(314,780	)	$	(78,560	)	$	393,340		$	(487,296	)

____________________


(1)	Guarantor and Consolidated direct operating expenses have been restated to reflect accrual of the CO₂delivery shortfall penalty. See Note 2.

Condensed Consolidating Statements of Cash Flows



	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2014
Net cash provided by (used in) operating activities	$	289,883	$	(262,831	)	$	65,742		$	(2,343	)	$	90,451
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—		(331,016		)	—			—			(331,016		)
Proceeds from sale of assets	—		706,158			—			1,208			707,366
Other	—		29,690			(80		)	(31,962		)	(2,352		)
Net cash provided by (used in) investing activities	—		404,832			(80		)	(30,754		)	373,998
Cash flows from financing activities
Other	75,193		(141,487		)	(66,271		)	33,097			(99,468		)
Net cash provided by (used in) financing activities	75,193		(141,487		)	(66,271		)	33,097			(99,468		)
Net increase (decrease) in cash and cash equivalents	365,076		514			(609		)	—			364,981
Cash and cash equivalents at beginning of year	805,505		1,013			8,145			—			814,663
Cash and cash equivalents at end of period	$	1,170,581	$	1,527		$	7,536		$	—		$	1,179,644



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2013
Net cash (used in) provided by operating activities(1)	$	(95,203	)	$	155,489		$	57,994		$	3,177		$	121,457
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(421,876		)	—			—			(421,876		)
Proceeds from sale of assets	—			2,559,371			3			—			2,559,374
Other	—			16,947			—			(21,995		)	(5,048		)
Net cash provided by investing activities	—			2,154,442			3			(21,995		)	2,132,450
Cash flows from financing activities
Repayments of borrowings	(1,115,500		)	—			—			—			(1,115,500		)
Premium on debt redemption	(61,997		)	—			—			—			(61,997		)
Intercompany borrowings (advances), net(1)	2,287,259			(2,297,970		)	10,711			—			—
Other	(29,395		)	3,208			(70,074		)	18,818			(77,443		)
Net cash provided by (used in) financing activities(1)	1,080,367			(2,294,762		)	(59,363		)	18,818			(1,254,940		)
Net increase (decrease) in cash and cash equivalents	985,164			15,169			(1,366		)	—			998,967
Cash and cash equivalents at beginning of year	300,228			922			8,616			—			309,766
Cash and cash equivalents at end of period	$	1,285,392		$	16,091		$	7,250		$	—		$	1,308,733

____________________

(1)

Net cash provided by financing activities has been revised to include intercompany (advances) borrowings, net previously included in net cash provided by operating activities. Amounts represent cash flows between the Parent and the Guarantors and Non-Guarantors resulting from the Parent’s centralized treasury activities. The impact of these revisions was not material to any previously issued financial statements.