Condensed Consolidating Financial Information

The Company provides condensed consolidating financial information for its subsidiaries that are guarantors of its registered debt. As of June 30, 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, as debtors-in-possession, 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

(Debtor-In-Possession)



	June 30, 2016
	Parent			Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	637,855		$	—	$	1,973	$	(5,662	)	$	634,166
Accounts receivable, net	—			80,364		1,681		(327		)	81,718
Intercompany accounts receivable	1,334,695			1,306,607		8,683		(2,649,985		)	—
Derivative contracts	—			21,000		—		—			21,000
Prepaid expenses	—			15,328		3		—			15,331
Other current assets	—			1,650		—		—			1,650
Total current assets	1,972,550			1,424,949		12,340		(2,655,974		)	753,865
Property, plant and equipment, net	—			1,436,065		39,187		—			1,475,252
Investment in subsidiaries	2,513,939			25,858		—		(2,539,797		)	—
Other assets	—			17,693		—		(5,902		)	11,791
Total assets	$	4,486,489		$	2,904,565	$	51,527	$	(5,201,673	)	$	2,240,908
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued expenses	$	66,917		$	6,561	$	9	$	(8,561	)	$	64,926
Intercompany accounts payable	1,325,240			1,290,496		31,677		(2,647,413		)	—
Derivative contracts	—			356		—		—			356
Asset retirement obligations	—			8,534		—		—			8,534
Total current liabilities	1,392,157			1,305,947		31,686		(2,655,974		)	73,816
Investment in subsidiaries	1,142,472			7,617		—		(1,150,089		)	—
Long-term debt	5,902			—		—		(5,902		)	—
Asset retirement obligations	—			62,425		—		—			62,425
Liabilities subject to compromise	4,218,881			157,109		1,621		—			4,377,611
Total liabilities	6,759,412			1,533,098		33,307		(3,811,965		)	4,513,852
Stockholders’ (deficit) equity
SandRidge Energy, Inc. stockholders’ (deficit) equity	(2,272,923		)	1,371,467		18,220		(1,389,687		)	(2,272,923		)
Noncontrolling interest	—			—		—		(21		)	(21		)
Total stockholders’ (deficit) equity	(2,272,923		)	1,371,467		18,220		(1,389,708		)	(2,272,944		)
Total liabilities and stockholders’ (deficit) equity	$	4,486,489		$	2,904,565	$	51,527	$	(5,201,673	)	$	2,240,908



	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

(Debtor-In-Possession)



	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In thousands)
Three Months Ended June 30, 2016
Total revenues	$	—		$	95,346		$	4,075		$	—	$	99,421
Expenses
Direct operating expenses	—			45,384			650			—		46,034
General and administrative	156			30,500			368			—		31,024
Depreciation, depletion, amortization and accretion	—			35,392			921			—		36,313
Impairment	—			245,579			8,050			—		253,629
Loss on derivative contracts	—			7,969			—			—		7,969
Loss on settlement of contract	—			1,092			—			—		1,092
Loss (gain) on sale of assets	—			1,395			(2,725		)	—		(1,330		)
Total expenses	156			367,311			7,264			—		374,731
Loss from operations	(156		)	(271,965		)	(3,189		)	—		(275,310		)
Equity earnings from subsidiaries	(323,466		)	(3,635		)	—			327,101		—
Interest (expense) income	(41,606		)	—			1			—		(41,605		)
Loss on extinguishment of debt	(152		)	—			—			—		(152		)
Reorganization items, net	(150,529		)	(49,938		)	(451		)	—		(200,918		)
Other income, net	—			2,072			5			—		2,077
Loss before income taxes	(515,909		)	(323,466		)	(3,634		)	327,101		(515,908		)
Income tax expense	2			—			1			—		3
Net loss	$	(515,911	)	$	(323,466	)	$	(3,635	)	$	327,101	$	(515,911	)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended June 30, 2015
Total revenues	$	—		$	203,591		$	26,016		$	—		$	229,607
Expenses
Direct operating expenses	—			95,832			2,934			—			98,766
General and administrative	61			37,379			942			—			38,382
Depreciation, depletion, amortization and accretion	—			98,416			9,501			—			107,917
Impairment	—			1,164,834			324,557			—			1,489,391
Loss on derivative contracts	—			29,067			3,937			—			33,004
Gain on sale of assets	—			(2,770		)	—			—			(2,770		)
Total expenses	61			1,422,758			341,871			—			1,764,690
Loss from operations	(61		)	(1,219,167		)	(315,855		)	—			(1,535,083		)
Equity earnings from subsidiaries	(1,312,652		)	(95,545		)	—			1,408,197			—
Interest expense	(73,703		)	(24		)	—			—			(73,727		)
Gain on extinguishment of debt	17,934			—			—			—			17,934
Other income, net	—			2,084			86			—			2,170
Loss before income taxes	(1,368,482		)	(1,312,652		)	(315,769		)	1,408,197			(1,588,706		)
Income tax expense	—			—			25			—			25
Net loss	(1,368,482		)	(1,312,652		)	(315,794		)	1,408,197			(1,588,731		)
Less: net loss attributable to noncontrolling interest	—			—			—			(220,249		)	(220,249		)
Net loss attributable to SandRidge Energy, Inc.	$	(1,368,482	)	$	(1,312,652	)	$	(315,794	)	$	1,628,446		$	(1,368,482	)



	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In thousands)
Six Months Ended June 30, 2016
Total revenues	$	—		$	182,011		$	7,742		$	—	$	189,753
Expenses
Direct operating expenses	—			98,844			1,532			—		100,376
General and administrative	206			104,288			808			—		105,302
Depreciation, depletion, amortization and accretion	—			75,137			1,925			—		77,062
Impairment	—			350,296			13,447			—		363,743
Loss on derivative contracts	—			5,161			—			—		5,161
Loss on settlement of contract	—			90,184			—			—		90,184
Gain on sale of assets	—			(485		)	(2,725		)	—		(3,210		)
Total expenses	206			723,425			14,987			—		738,618
Loss from operations	(206		)	(541,414		)	(7,245		)	—		(548,865		)
Equity earnings from subsidiaries	(596,824		)	(7,694		)	—			604,518		—
Interest (expense) income	(122,757		)	—			1			—		(122,756		)
Gain on extinguishment of debt	41,179			—			—			—		41,179
Reorganization items, net	(150,529		)	(49,938		)	(451		)	—		(200,918		)
Other income, net	—			2,222			8			—		2,230
Loss before income taxes	(829,137		)	(596,824		)	(7,687		)	604,518		(829,130		)
Income tax expense	—			—			7			—		7
Net loss	$	(829,137	)	$	(596,824	)	$	(7,694	)	$	604,518	$	(829,137	)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Six Months Ended June 30, 2015
Total revenues	$	—		$	396,112		$	48,811		$	(8	)	$	444,915
Expenses
Direct operating expenses	—			207,950			5,770			(8		)	213,712
General and administrative	117			72,598			1,816			—			74,531
Depreciation, depletion, amortization and accretion	—			208,269			20,182			—			228,451
Impairment	—			2,068,069			505,188			—			2,573,257
Gain on derivative contracts	—			(15,042		)	(1,781		)	—			(16,823		)
Gain on sale of assets	—			(4,670		)	(4		)	—			(4,674		)
Total expenses	117			2,537,174			531,171			(8		)	3,068,454
Loss from operations	(117		)	(2,141,062		)	(482,360		)	—			(2,623,539		)
Equity earnings from subsidiaries	(2,284,723		)	(145,166		)	—			2,429,889			—
Interest expense	(136,529		)	(40		)	—			—			(136,569		)
Gain on extinguishment of debt	17,934			—			—			—			17,934
Other income, net	—			1,545			89			—			1,634
Loss before income taxes	(2,403,435		)	(2,284,723		)	(482,271		)	2,429,889			(2,740,540		)
Income tax expense	—			—			65			—			65
Net loss	(2,403,435		)	(2,284,723		)	(482,336		)	2,429,889			(2,740,605		)
Less: net loss attributable to noncontrolling interest	—			—			—			(337,170		)	(337,170		)
Net loss attributable to SandRidge Energy, Inc.	$	(2,403,435	)	$	(2,284,723	)	$	(482,336	)	$	2,767,059		$	(2,403,435	)

Condensed Consolidating Statements of Cash Flows

(Debtor-In-Possession)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Six Months Ended June 30, 2016
Net cash (used in) provided by operating activities	$	(129,888	)	$	(4,589	)	$	1,098		$	(5,662	)	$	(139,041	)
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(126,245		)	—			—			(126,245		)
Other	—			18,695			2,980			(6,338		)	15,337
Net cash (used in) provided by investing activities	—			(107,550		)	2,980			(6,338		)	(110,908		)
Cash flows from financing activities
Proceeds from borrowings	488,900			—			—			—			488,900
Intercompany (advances) borrowings, net	(107,701		)	111,292			(3,591		)	—			—
Other	(40,373		)	—			(6,338		)	6,338			(40,373		)
Net cash provided by (used in) financing activities	340,826			111,292			(9,929		)	6,338			448,527
Net increase (decrease) in cash and cash equivalents	210,938			(847		)	(5,851		)	(5,662		)	198,578
Cash and cash equivalents at beginning of year	426,917			847			7,824			—			435,588
Cash and cash equivalents at end of period	$	637,855		$	—		$	1,973		$	(5,662	)	$	634,166



	Parent			Guarantors(1)			Non-Guarantors			Eliminations(1)			Consolidated
	(In thousands)
Six Months Ended June 30, 2015
Net cash (used in) provided by operating activities	$	(122,182	)	$	344,779		$	65,902		$	30,495		$	318,994
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(636,822		)	—			—			(636,822		)
Other	—			18,701			5			(10,719		)	7,987
Net cash (used in) provided by investing activities	—			(618,121		)	5			(10,719		)	(628,835		)
Cash flows from financing activities
Proceeds from borrowings	2,190,000			—			—			—			2,190,000
Repayments of borrowings	(940,000		)	—			—			—			(940,000		)
Distribution to unitholders	—			—			(97,498		)	12,808			(84,690		)
Intercompany (advances) borrowings, net	(275,066		)	276,384			(1,318		)	—			—
Other	(53,105		)	—			32,584			(32,584		)	(53,105		)
Net cash provided by (used in) financing activities	921,829			276,384			(66,232		)	(19,776		)	1,112,205
Net increase (decrease) in cash and cash equivalents	799,647			3,042			(325		)	—			802,364
Cash and cash equivalents at beginning of year	170,468			1,398			9,387			—			181,253
Cash and cash equivalents at end of period	$	970,115		$	4,440		$	9,062		$	—		$	983,617

____________________

(1)

Other investing activities for the Guarantor has increased to correctly exclude $84.7 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 $84.7 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 provided by (used in) financing activities.