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, 2016, 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 Unsecured 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.

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 the Company’s proportionate share of the Royalty Trusts, 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.

Condensed Consolidating Balance Sheets



	March 31, 2016
	Parent			Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	669,978		$	22,084	$	1,980	$	—		$	694,042
Accounts receivable, net	2			71,410		1,294		68			72,774
Intercompany accounts receivable	1,340,776			1,280,481		5,888		(2,627,145		)	—
Derivative contracts	—			61,403		—		—			61,403
Prepaid expenses	—			10,421		6		—			10,427
Other current assets	—			15,239		—		—			15,239
Total current assets	2,010,756			1,461,038		9,168		(2,627,077		)	853,885
Property, plant and equipment, net	—			1,654,610		48,411		—			1,703,021
Investment in subsidiaries	2,774,926			33,055		—		(2,807,981		)	—
Other assets	3,012			20,043		—		(5,902		)	17,153
Total assets	$	4,788,694		$	3,168,746	$	57,579	$	(5,440,960	)	$	2,574,059
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Current maturities of long-term debt	$	3,981,371		$	—	$	—	$	—		$	3,981,371
Accounts payable and accrued expenses	174,840			87,778		979		68			263,665
Intercompany accounts payable	1,299,686			1,296,354		31,105		(2,627,145		)	—
Derivative contracts	—			355		—		—			355
Asset retirement obligations	—			8,440		—		—			8,440
Total current liabilities	5,455,897			1,392,927		32,084		(2,627,077		)	4,253,831
Investment in subsidiaries	1,079,991			7,539		—		(1,087,530		)	—
Long-term debt	5,902			—		—		(5,902		)	—
Asset retirement obligations	—			62,279		—		—			62,279
Other long-term obligations	81			11,066		—		—			11,147
Total liabilities	6,541,871			1,473,811		32,084		(3,720,509		)	4,327,257
Stockholders’ (deficit) equity
SandRidge Energy, Inc. stockholders’ (deficit) equity	(1,753,177		)	1,694,935		25,495		(1,720,430		)	(1,753,177		)
Noncontrolling interest	—			—		—		(21		)	(21		)
Total stockholders’ (deficit) equity	(1,753,177		)	1,694,935		25,495		(1,720,451		)	(1,753,198		)
Total liabilities and stockholders’ (deficit) equity	$	4,788,694		$	3,168,746	$	57,579	$	(5,440,960	)	$	2,574,059



	December 31, 2015
	Parent			Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	426,917		$	847	$	7,824	$	—		$	435,588
Accounts receivable, net	—			122,606		4,781		—			127,387
Intercompany accounts receivable	1,226,994			1,305,573		30,683		(2,563,250		)	—
Derivative contracts	—			84,349		—		—			84,349
Prepaid expenses	—			6,826		7		—			6,833
Other current assets	—			19,931		—		—			19,931
Total current assets	1,653,911			1,540,132		43,295		(2,563,250		)	674,088
Property, plant and equipment, net	—			2,124,532		110,170		—			2,234,702
Investment in subsidiaries	2,749,514			8,531		—		(2,758,045		)	—
Other assets	3,131			16,008		—		(5,902		)	13,237
Total assets	$	4,406,556		$	3,689,203	$	153,465	$	(5,327,197	)	$	2,922,027
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued expenses	$	160,122		$	265,767	$	2,528	$	—		$	428,417
Intercompany accounts payable	1,337,688			1,192,569		32,993		(2,563,250		)	—
Derivative contracts	—			573		—		—			573
Asset retirement obligations	—			8,399		—		—			8,399
Total current liabilities	1,497,810			1,467,308		35,521		(2,563,250		)	437,389
Investment in subsidiaries	1,038,303			400,771		—		(1,439,074		)	—
Long-term debt	3,568,280			—		—		(5,902		)	3,562,378
Asset retirement obligations	—			95,179		—		—			95,179
Other long-term obligations	80			14,734		—		—			14,814
Total liabilities	6,104,473			1,977,992		35,521		(4,008,226		)	4,109,760
Stockholders’ (deficit) equity
SandRidge Energy, Inc. stockholders’ (deficit) equity	(1,697,917		)	1,711,211		117,944		(1,829,155		)	(1,697,917		)
Noncontrolling interest	—			—		—		510,184			510,184
Total stockholders’ (deficit) equity	(1,697,917		)	1,711,211		117,944		(1,318,971		)	(1,187,733		)
Total liabilities and stockholders’ (deficit) equity	$	4,406,556		$	3,689,203	$	153,465	$	(5,327,197	)	$	2,922,027

Condensed Consolidating Statements of Operations



	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In thousands)
Three Months Ended March 31, 2016
Total revenues	$	—		$	86,665		$	3,667		$	—	$	90,332
Expenses
Direct operating expenses	—			53,461			881			—		54,342
General and administrative	50			73,788			440			—		74,278
Depreciation, depletion, amortization and accretion	—			39,745			1,004			—		40,749
Impairment	—			104,717			5,397			—		110,114
Gain on derivative contracts	—			(2,808		)	—			—		(2,808		)
Loss on settlement of contract	—			89,092			—			—		89,092
Gain on sale of assets	—			(1,880		)	—			—		(1,880		)
Total expenses	50			356,115			7,722			—		363,887
Loss from operations	(50		)	(269,450		)	(4,055		)	—		(273,555		)
Equity earnings from subsidiaries	(273,358		)	(4,058		)	—			277,416		—
Interest expense	(81,151		)	—			—			—		(81,151		)
Gain on extinguishment of debt	41,331			—			—			—		41,331
Other income, net	—			150			3			—		153
Loss before income taxes	(313,228		)	(273,358		)	(4,052		)	277,416		(313,222		)
Income tax (benefit) expense	(2		)	—			6			—		4
Net loss	$	(313,226	)	$	(273,358	)	$	(4,058	)	$	277,416	$	(313,226	)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2015
Total revenues	$	—		$	192,520		$	22,796		$	(8	)	$	215,308
Expenses
Direct operating expenses	—			112,117			2,837			(8		)	114,946
General and administrative	56			35,219			874			—			36,149
Depreciation, depletion, amortization and accretion	—			109,853			10,681			—			120,534
Impairment	—			903,235			180,631			—			1,083,866
Gain on derivative contracts	—			(44,109		)	(5,718		)	—			(49,827		)
Gain on sale of assets	—			(1,900		)	(4		)	—			(1,904		)
Total expenses	56			1,114,415			189,301			(8		)	1,303,764
Loss from operations	(56		)	(921,895		)	(166,505		)	—			(1,088,456		)
Equity earnings from subsidiaries	(972,071		)	(49,621		)	—			1,021,692			—
Interest expense	(62,826		)	(16		)	—			—			(62,842		)
Other (expense) income, net	—			(539		)	3			—			(536		)
Loss before income taxes	(1,034,953		)	(972,071		)	(166,502		)	1,021,692			(1,151,834		)
Income tax expense	—			—			40			—			40
Net loss	(1,034,953		)	(972,071		)	(166,542		)	1,021,692			(1,151,874		)
Less: net loss attributable to noncontrolling interest	—			—			—			(116,921		)	(116,921		)
Net loss attributable to SandRidge Energy, Inc.	$	(1,034,953	)	$	(972,071	)	$	(166,542	)	$	1,138,613		$	(1,034,953	)

Condensed Consolidating Statements of Cash Flows



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended March 31, 2016
Net cash used in operating activities	$	(131,724	)	$	(28,388	)	$	(2,532	)	$	—		$	(162,644	)
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(70,546		)	—			—			(70,546		)
Other	—			6,561			—			(3,484		)	3,077
Net cash used in investing activities	—			(63,985		)	—			(3,484		)	(67,469		)
Cash flows from financing activities
Proceeds from borrowings	488,900			—			—			—			488,900
Intercompany (advances) borrowings, net	(113,782		)	113,610			172			—			—
Other	(333		)	—			(3,484		)	3,484			(333		)
Net cash provided by (used in) financing activities	374,785			113,610			(3,312		)	3,484			488,567
Net increase (decrease) in cash and cash equivalents	243,061			21,237			(5,844		)	—			258,454
Cash and cash equivalents at beginning of year	426,917			847			7,824			—			435,588
Cash and cash equivalents at end of period	$	669,978		$	22,084		$	1,980		$	—		$	694,042



	Parent			Guarantors(1)			Non-Guarantors			Eliminations(1)			Consolidated
	(In thousands)
Three Months Ended March 31, 2015
Net cash (used in) provided by operating activities	$	(92,504	)	$	133,837		$	25,968		$	22,794		$	90,095
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(377,052		)	—			—			(377,052		)
Other	—			5,279			4			(4,267		)	1,016
Net cash (used in) provided by investing activities	—			(371,773		)	4			(4,267		)	(376,036		)
Cash flows from financing activities
Proceeds from borrowings	420,000			—			—			—			420,000
Repayments of borrowings	(245,000		)	—			—			—			(245,000		)
Intercompany (advances) borrowings, net	(238,183		)	238,337			(154		)	—			—
Other	(14,775		)	—			(25,189		)	(18,527		)	(58,491		)
Net cash (used in) provided by financing activities	(77,958		)	238,337			(25,343		)	(18,527		)	116,509
Net (decrease) increase in cash and cash equivalents	(170,462		)	401			629			—			(169,432		)
Cash and cash equivalents at beginning of year	170,468			1,398			9,387			—			181,253
Cash and cash equivalents at end of period	$	6		$	1,799		$	10,016		$	—		$	11,821

____________________

(1)

Other investing activities for the Guarantor has increased to correctly exclude $43.7 million in noncontrolling interest distributions, with a corresponding decrease for Eliminations for this same line item. In addition, other financing activities for the Guarantor, has decreased to correctly exclude $43.7 million of noncontrolling interest distributions, with a corresponding increase for Eliminations for the same line item. The corrections did not result in any changes to consolidated net cash (used in) provided by investing activities or net cash (used in) provided by financing activities.